Medicare Fraud and For-Profit Hospitals- A Story That Never Ends

Sunday, CBS’ Sixty Minutes took a close look at Health Management Associates (HMA) a for-profit hospital chain that, according to its employees, has “relentlessly pressured its doctors to admit more and more patients—regardless of medical need—in order to raise revenues”

“We talked to more than 100 current and former employees and we heard a similar story over and over,” CBS correspondent  Steve Kroft reported.  Emergency room physicians were told “that if they didn’t start admitting more patients to the hospital, they would lose their jobs.” The orders came from the top:

With 71 hospitals in 15 states, HMA is the fourth-largest for profit chain in the country. Last year it raked in revenues of nearly $5.8 billion;  half of that came from Medicare and Medicaid. In other words, taxpayers were footing the bill for a large share of those unnecessary hospitalizations.

Patients also paid. As one doctor observed: “If you are put into the hospital for reasons other than a good, justifiable medical reason, it puts you at significant risk for hospital-acquired infections and what we would refer to as ‘medical misadventure’” (i.e. “preventable medical errors)

     :                           “Putting Heads on Beds” –An Old Story

 The piece was shocking. But it is not a new story. It is an old story. To be more precise, it is a never-ending story. In Money-Driven Medicine: The Real Reason HealthCare Costs So Much, I profiled several for-profit hospital companies that did just what Health Management Associates has done: “put heads on beds”– even though the patients didn’t need to be hospitalized.

At Tenet, in Redding, California, patients weren’t just hospitalized, they underwent heart surgery. An investigation would reveal that in many cases, they “had no serious cardiac problems whatsoever.”

 A FBI affidavit estimated that in one-quarter of all cases, Tenet’s two “rainmaker” heart surgeons were slicing  open patients who should never have been on an operating table. Other doctors tried to alert the hospital’s administration. They were ignored.

Some of those patients did not survive. Others were crippled. All suffered psychological trauma. 

                    HCA:  Florida Governor Rick Scott’s Back-Story                       

In 1997, Health Corporation of America (HCA) made headlines when FBI agents swarmed HCA offices in five states, and found evidence that at HCA, executive salaries hinged on meeting financial targets such as “growth in admissions and surgery cases.”
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A Doctor Confides, “My Primary Doc is a Nurse”

Last week I interviewed a doctor who told me that his primary care doc is a “physician assistant”  who has been trained to deliver primary care.   He said it casually, dropping the fact into a long conversation.

Dr. David Kauff is an internist at Seattle’s Group Health Cooperative (GHC), an organization that has a fabulous reputation–both among patients and among physicians—for its primary care program.  One reason is that at Group Health, doctors, physicians assistants and nurse practitioners work together in teams. “The success of our model is based on the fact that everyone in this together; we are corralled by a common purpose,” says Kauff, who also serves as GHC’s  Medical  Director for Practice and Leadership. 

I’ll be writing more about Group Health Cooperative in a few days.

 In this post, I would like to focus on the growing role of Nurse Practitioners (NPs) and Physician Assistants (PAs) as clinicians.  NPs are registered nurses who have gone on to earn a master’s or a doctorate. Some specialize in areas such as anesthesiology, pediatrics (pediatric nurses) or Ob-Gyn (certified nurse-midwives). NP’s can run clinics; some run their own practices.     

By contrast, physician assistants (PAs) don’t usually work alone. While physicians may not be on-site, typically doctors oversee their work.  

PAs are formally trained to provide diagnostic, therapeutic, and preventive health care services.  They take medical histories, examine and treat patients, order and interpret laboratory tests and X- rays, and make diagnoses. In many cases, they did not begin their careers as nurses. They may have been  paramedics, respiratory therapists, or emergency care technicians (EMTs) before becoming PAs.  

Currently, 17 states, plus the District of Columbia, let nurse practitioners operate independently.  In 33 states regulations vary. As this map  reveals, in some places NPs are not allowed to prescribe medication. In others, they may have to consult with a physician when treating patients.

It’s worth noting that NPs enjoy greater freedom in the Northwest, the Upper Middle West, and Northern New England (areas that some healthcare reformers refer to as “Canada South” because these states are in the vanguard of reform) as well as in the Southwest, where many NP’s started working in group practices, and they went out and established their own clinics. Nationwide, about 6,000 nurses operate independent primary-care practices.                                               

                                              Why Physicians Object

Today, 14 states are debating whether NPs should be allowed to practice on their own.  Many emphasize the difference in education and years of training. Though in truth, the length of training is not so different. Becoming a primary care doctor requires four years of medical school plus three years of residency. A nurse practitioner  attends nursing school for four years, then spends two to three years in graduate school, depending on whether he or she is getting an M.A. or a Ph.D. (In 2015, all nurse practitioners will be required to earn a Ph.D.) 

Most NPs also have nursing experience. At the University of Michigan, for instance, the average candidate admitted to the NP program has 7 years of hands-on experience as a nurse.  But while the number of years spent training are not so different, as I explain below, traditionally ,the nature of that training has been very different.   

Doctors say that they are worried about patient safety. “I see it as physicians being true to their oath “  Dr. Adris Hoven, president-elect of the American Medical Association recently told Marketplace Health Care’s Dan Gorenstein.   Hoven insists that doctors are “not threatened” by NPs.  “At the end of the day what they want to do is deliver the best healthcare possible.”  

Dr. John Rowe, a professor of Health Policy and Management at Columbia’s School of Public Health, doesn’t buy the argument.  As he points out, nurse practitioners are already working without primary care doctors: “The fact is this is going on in 16-17 states,” he told Gorenstein, “and there is no evidence that it’s not good for the patient.”  A recent Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation backs him up: “studies comparing the quality of care provided by physicians and nurse practitioners have found that clinical outcomes are similar.”

At the same time, Rowe understands why doctors are uncomfortable. “The physicians feel they have something special to offer,” he explains. “And being told there are individuals who are less well trained can do it as well as they could is a very difficult lesson for them.”                                    

When I last wrote about nurse practitioners, back in 2010, one physician/reader (“Sharon M.D.”) was exceptionally candid on this point:

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Expanding Medicaid Is Not Enough–Making Medicaid A Federal Program

 Note to readers—please read the post below, “Pulse—More Stories from the Heart of Medicine” (which includes “One More Child Left Behind”) before you read this post.

When I read “One More Child Left Behind,”  all I could think of was how much Aaron’s arm must have hurt during the more than 24 hours that he didn’t receive treatment. I also imagined how frightened and bewildered the six-year-old must have been as he heard his mother and grandmother talk, and realized that they couldn’t persuade a doctor to help him.

This story was published in 2009—one year before the Affordable Care Act was passed.  The ACA extends Medicaid to millions. But even under reform legislation, many children like Aaron will not receive care. This is because Medicaid now pays an average of 34% less than Medicare for exactly the same treatment.

Why on earth would we pay doctors and hospital less to care for poor patients than we would pay them to care for the elderly?

Lower Medicaid fees are part of the legacy of racism. (I write about this in Money-Driven Medicine.)  When the Medicare and Medicaid laws were passed in 1965, Southern Congressmen refused to agree to laws that would pay doctors who treated the poor as much as they reimburse physicians who care for older patients.

At the time, relatively few African-Americans living in the South were over 65.  Most died long before they would be eligible for Medicare. Yet many African-Americans were poor, and would qualify for Medicaid. This is what disturbed Southern legislators. They wanted to make sure that healthcare remained segregated.    

Even under Reform, Specialists Who Treat the Poor Will be Under-Paid   

Medicaid rates vary widely by state, but on average, according to the Kaiser Family Foundation, the new program will offer PCP’s a 73 percent raise This should open doors for millions of Medicaid patients. In some states that have been paying the lowest rates, the hike will be much higher. (See this map) The ACA guarantees raising Medicaid reimbursements for primary care for just two years (2013-2014). But I expect this program will be extended, although increases may be modified. Once begun, it will be very hard to justify ending it.

At the same time, specialists who care for Medicaid patients will continue to receive about 1/3 less than when treating seniors.  As a result, even under the ACA a great many Medicaid patients will be hard-pressed to find a specialist willing to see them.
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Obama to Boehner: “John, I’m Getting Tired of Hearing You Say That”

This was President Obama’s reply, during fiscal cliff negotiations, when House Speaker John Boehner declared, for the umpteenth time, that “ The U.S. has a spending problem.” 

I can understand the president’s irritation. How could anyone believe that we have a “spending problem?’

Look around. Consider the state of our bridges, our roads and our crumbling inner city public schools. Are we spending too much on the nation’s infrastructure?

Next, think about unemployment. During this recovery we have lost 750,000 public sector jobs.  Republicans are intent on “starving the beast” (of government) and as a result Washington has not given states the financial support they need continue delivering public services. Across the nation, public school teachers have been laid off in droves, while class sizes increase at unprecedented rates.  Does this sound like government spending run amuck?

One in five American children now lives in poverty. Seventeen million children find themselves in homes where they can’t be sure of getting enough to eat.  (a.k.a. “food-insecure households.”)  At the end of the month, many kids go to bed hungry because the government Food Stamps program (now known as Supplemental Nutrition Assistance Program, or SNAP)  gives families less than $1.50 per person per meal. Are we being overly generous?

During the past two wars, we sent millions of American men and women to Iraq and Afghanistan –many went back for repeated tours. In some cases, their bodies were not  broken–but their minds were.  Now 1.3 million Vets seeking mental health services are told they must wait of 50 days before getting treatment.   A recent government report suggests that 22 Vets die by suicide every day – about 20 percent of all Americans who kill themselves. Are we spending too much on healthcare for Veterans?

Let me suggest that we don’t have a spending problem. We have a revenue problem. Current federal revenue levels are at their lowest levels since the 1950s. 

                      How Anti-Tax Pledges Have Weakened the Nation

In a recent post, Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, nailed it: “The tax system doesn’t raise enough revenue.  And that’s not just the recession; it’s also tax policy and anti-tax pledges  . . . The system has become less progressive, with the largest declines in effective tax rates at the top of the income scale.

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Obama’s Proposals For Medicare — Do They Go Far Enough? Will They Become Law?

Not long ago, I wrote about the Center for American Progress’ (CAP’s) “Senior Protection Plan” —a report that aims to rein in Medicare “by $385 billion over ten years without harming beneficiaries.” In that post, I suggested that CAP’s proposals might well give us a preview of the “modest adjustments” that President Obama had said he would be willing to make to Medicare.  At the time, I highlighted three of CAP’s recommendations:

– increase premiums for the wealthiest 10% of Medicare beneficiaries (raising $25 billion);

– insist that drug-makers extend Medicaid rebates to low-income Medicare beneficiaries (saving $137.4 billion);

– prohibit “pay for delay” agreements that let “brand-name drug manufacturers pay generic drug manufacturers to keep generics off the market” (saving $5 billion).

Last week, in his State of the Union address, President Obama embraced the first two:  “Already, the Affordable Care Act is helping to slow the growth of health care costs,” he noted. “The reforms I’m proposing go even further. We’ll reduce taxpayer subsidies to prescription drug companies and ask more from the wealthiest seniors.”  (In time, I suspect that the administration also will call for a ban on those decidedly seamy “pay for delay” deals.)

“On Medicare,” he added, “I’m prepared to enact reforms that will achieve the same amount of health care savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson-Bowles commission.” The commission called for reducing Medicare spending by roughly $350 billion over 10 years–  a sum that is not far from CAP’s $385 billion target.

Are These “Adjustments” Too Modest ?

These may seem like small numbers. But keep in mind that this is on top of the $950 billion that the Affordable Care Act (ACA) saves by squeezing waste out of health care spending, while simultaneously raising new revenues. Of that $950 billion, some $350 billion comes in the form of Medicare savings achieved by:

–  Pruning over-payments to private sector Medicare Advantage insurers– $132 billion  

–  Containing Medicare inflation by shaving annual “updates” in  payments to hospitals and other large facilities by 1% a year for ten years, beginning in 2014– $196 billion

– Cutting disproportionate share hospital payments to hospitals that care for a disproportionate share of poor and uninsured patients over 10 years beginning in 2014 – $22 billion.

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Join the debate on “Reining in Medicare Costs without Hurting Seniors”

The January 26 post below (“How to Rein in Medicare costs without Hurting Seniors“) has drawn some 43 comments (including mine, as I responded to readers). I thought of turning a couple of my replies into posts, but then decided it might be more interesting for you to read them in the context of what other readers said.

I would love to see more readers participate in this thread. Comments are still open.

It’s a lively thread that takes on a number of third-rail issues: Does Medicare spend too much on pricey cancer drugs, end-of-life care and brand name hospitals?

 Should we try to spend less on end-of life care? Many say “Yes,” but Zeke Emanuel (a medical ethicist and oncologist who was part of the Obama team during the president’s first term), says “No.” I link to a column where he notes that “It is conventional wisdom that end-of-life care is an increasingly huge proportion of health care spending. . . Wrong. Here are the real numbers: end-of-life care (not just for the elderly, but for all Americans) accounts for just 10% to 12% of  total health care spending. This figure has not changed significantly in decades.”

He goes on to suggest that while we probably can’t make end-of-life “cheaper,” we can make it “better . . .  Here are four things the health care system should do to try to improve care for the dying, even if they won’t save money.”

A number of readers comment on what is driving Medicare spending. Is it “patient expectations,”  “doctors’ fear of litigation,”  “regulations that dictate nurse-staffing ratios,” “practice patterns that doctors learned long ago,” or is the biggest problem “promotional efforts by manufacturers?”

Other questions come up: Does anyone really have any idea how much Medicare will cost in 2022?  By then will Medicare have begun negotiating with drug-makers and device-makers for discounts on drugs (the way the VA does now, saving 40%)?  How far will Medicare go in using medical evidence to decide what to cover?

One doctor/reader points out that in his field Medicare has begun to refuse to pay for procedures when research shows that they are not effective. He and another reader agree that in this way Medicare can provide “political cover” for private sector insurers who will follow Medicare’s lead.

We also discuss the deficit, and whether we should be trying to address the deficit now — or wait until the recession ends and unemployment falls. Also, is the deficit already dissolving as CAP suggests? 

And is the deficit our biggest problem? On this question, you will find links to Paul Krugman, Peter Orszag (who analyzes the slow-down in health care spending over the past three years as a “structural change, not just the result of the recession) and Ezra Klein,

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How to Rein in Medicare Spending Without Hurting Seniors

In his Inaugural speech, President Obama renewed his commitment to safety nets:  ”Medicare and Medicaid and Social Security–these things do not sap our initiative, they strengthen us.

Yet last week, he signaled that he is “open to making modest adjustments to programs like Medicare.” Should seniors brace for bad news?

No. There are many ways to cut Medicare spending without drawing blood. It’s a matter of using a scalpel, not an axe, to trim the fat.

Not long ago, the Center for American Progress (CAP) unveiled a Senior Protection Plan that would do just that, revealing how we could reduce Medicare spending by $385 billion without harming beneficiaries.”

The administration pays attention to CAP. Recently Bloomberg News described CAP as “the intellectual wellspring for Democratic policy proposals, including many that are shaping the agenda of the Obama administration.” This suggests that the report’s proposals may offer a preview of “adjustments to Medicare spending” that the president would consider.

How would CAP save $358 billion without rationing benefits or shifting costs to middle-class seniors? The report focuses on squeezing waste out of the system. Waste doesn’t help beneficiaries.

During recent fiscal cliff negotiations, Democrats and Republicans agreed to adopt four of CAP’s proposals, and I suspect that, over time, we will see more of its recommendations become part of the reality of health care reform.

Recently, I interviewed CAP president NeeraTanden and Topher Spiro, CAP’s managing director for health policy. I was impressed by how their practical approach differs from conservative strategies for slicing “entitlements.”
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U.S. Media Loves “Fiscal Cliff” Metaphor; The Economist Recognizes that It’s An Imaginary Line in the Sand

In the U.S., pundits cannot resist the fiscal cliff metaphor: it’s colorful, punchy and easy to understand. It’s just two words long. What’s not to like?

It’s not true.

The metaphor assumes that if Republicans and Democrats fail to reach an agreement on the budget by the end of the year, the U.S. economy falls over a cliff,  crashes, and burns.  The “cliff “metaphor complements the equally imaginative “iceberg metaphor” that some fear-mongers use to portray the deficit. (Think Titanic) 

It’s all a bit more complicated than the metaphors suggest.

What few conservatives mention is that the deficit has already begun to dissolve:  since 2009 the deficit has fallen from 10% of GDP to 7% in the fiscal year that ended on September 30th.  By historic standards this is still enormous, and must be addressed. But  the numbers demonstrate that, over time, we can reduce the deficit without renting the nation’s safety nets.

As for the cliff, there is no precipice—just an imaginary line, drawn in the sand, as Republicans and Democrats play “chicken.”

The Economist understands all of this. The lead story in the most recent issue focuses on the “cliff” and points out that “worries” about what will happen if we go over that precipice are “understandable”  but “overblown.” The “risk of economic catastrophe is minimal.” Any damage would be short-term. 

I don’t always agree with the Economist: the UK publication has its own sometimes eccentric slant on things. But on the whole, it is a thoughtful publication—well-researched and fact-checked.  Moreover, in this case, distance may give the Economist a perspective on the problem that some in the U.S. lack.

                                   Exaggerating the Threat to the Middle-Class      

Yesterday’s New York Times suggests that if we cross that line in the sand, an already beleaguered the middle-class will suffer great hardship, and this “Complicates Democrats’ Stance in Talks.” 

The analysis suggests that Democrats don’t dare just stand back and let Bush’s tax cuts expire– as they will if party leaders don’t reach a settlement by year-end: “Only a small handful of policy voices on the left are making the case for the tax cuts to fully expire. In part, that is because the economy is still growing slowly, and tax increases have the potential to weaken it.” But it is also because “If the two parties fail to come to a deal by Jan. 1, taxes on the average middle-income family would rise about $2,000 over the next year. That would follow a 12-year period in which median inflation-adjusted income dropped 8.9 percent, from $54,932 in 1999 to $50,054 in 2011.”

This assumes that once we miss the January 1 deadline, tax hikes for the middle-class would become permanent—which, of course, is not true. Talk about how much more a family would pay over the course of 2013 falls somewhere between hyperbole and hysteria, ignoring what everyone knows:

If the Bush tax cuts expire, Democrats will presumably simply propose to restore them in January for those [families] earning less than $250,000,” the Economist observes, “daring Republicans to block them.” 
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“Fiscal Cliff” Talks: An Update

Today, for the first time since the election, President Obama and House Speaker John Boehner met alone, face-to-face, at the White House to discuss ongoing negotions over the budget.   (I can’t help but see the photo, which shows Obama with a hand on Boehnr’s shoulder, as a reference to the “Saturday Night Live” skit that appeared last night.  

I’m more and more hopeful about the budget negotiations. Recentlly, I wrote that Obama had “won round one,” explaining that I believed CNN’s report that  the Republicans and Democrats have reached a deal on taxes. “Both sides agree the wealthy will pay more, so now fiscal cliff talks come down to how much Republicans can wring out of the White House in return for giving in on taxes.”  Based on everything I know about the economics and the politics of the situation, this makes sense. /

Since then Boehner has said:  “No progress has been made.”

This does not change the story:  If, as CNN’s sources say, (and I believe) Republicans have conceded that taxes cuts for the top 2% must expire Janauary 1, while cuts for the remaining 98% will continue, that doesn’t mean they are ready to make the agreement public.

Understandably, Republicans are not willing to acknowledge that they lost round one of negotiations until they can also announce that they won something in round two.  Nor does  President Obama want to blind-side Boehner by letting it leak that a tax deal is in place. That would be counter-productive.

                          The Inside Story and the Outside Story

Recentlly, the Washington Post’s Ezra Klein reported:  “Right now, the fiscal cliff negotiations are proceeding on two tracks.

“One track includes the press releases, public statements and legislative tactics the two parties are deploying to prove the purity of their faith and their commitment to beating the other side to a bloody pulp. Watch these closely and it’s easy to get depressed.  . . ‘There isn’t a progress report;’ Republican House Speaker John Boehner sighed Friday, ‘because there’s no progress to report.’

“The other track includes the offers, counteroffers and red lines proposed by Boehner and President Obama. If you look at these closely, a deal is taking shape.”

 I agree with Ezra about the “two tracks”. But I don’t agree regarding the “shape” of the deal that is emerging.

First, I agree that  the majority of Republicans in Congress have accepted the fact that the Bush-era tax breaks for folks earning over $200,000 (and couples earning over $250,000) will have to expire. I won’t try to guess when politicians will complete the two stages of bargaining and be ready to announce a deal. We may go right up to the January 1 deadline.

Moreover, it is  possible that when it comes to cutting government spending, too many Republicans will remain stubbornly, and foolishly, intransigent — insisting on concessions that would inflict pain on the middle-class.

If that happens, I predict that President Obama will let us sail over the so-called “fiscal cliff.”  He knows this wouldn’t do any permanent damage to the economy.  As Rutgers reported today, even Wall Street does not seem panicked by the prospect: “Investors have peered over the cliff and realized they are looking at a gentle slope . . . . some investors say lawmakers still have time in early 2013 to strike a deficit-reduction deal without imperiling the economy. A survey of 62 Wall Street money managers released on December 5 showed market losses would be manageable if the U.S. goes over the fiscal cliff, even though worries still run deep.

Many on Wall Street understand that, early in the spring, the administration could undo Draconian spending cuts, while lowering tax rates for the 98%. Public pressure will ensure that happens. (In the meantime, the Treasury Secretary could lower withholding rates so that middle-class Americans didn’t suddenly see their paychecks trimmed.)

But taking a ride down that slope would do lasting damage to the GOP.  Polls show that voters would blame Republicans. This is why I think that, in the end, Republican leadership in Congress will do whatever it must to make a deal before January.  As I indicate in the post below. Tea Party extremists in the Republican party are being side-lined.

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The Post-Election Edition of Health Wonk Review

This most recent edition of HWR, a compendium of some of the best health care posts of the past two weeks, came out ten days ago. I apologize that I’ve been tardy in commenting— but, not to worry, it’s an “evergreen.” The problems Health-Wonkers raise haven’t been solved in the past week, and the issues discussed remain just as “hot”– as they were.

Managed Care Matters” Joe Paduda does an outstanding job of hosting the round-up in a post titled: “Elections Have Consequences.”

He begins with “Health Policy and MarketPlace Review’s”  Bob Laszewski, who  notes in the wake of the election, we can be certain of one thing: Obamacare will be implemented. To be sure, there will be lawsuits challenging reform legislation, but Laszewski says, “I wouldn’t waste a lot of time worrying about those. Anyone in the market will do better spending their time getting ready for all of the change coming.” He’s far more worried about whether the government will be able to set up the Exchanges in time to meet the deadline—and how legislators are going to solve the “fiscal cliff” problem.

Writing on “Health Affairs” Timothy Jost agrees that “there is a great deal of work needs to be done before reform becomes a reality.”  He focuses on the many rules that the administration will need to issue to provide guidance to the states, to employers and to insurers:  “The exchanges must begin open enrollment on October 1, 2013,” he observes. “By that date, the exchanges must have certified qualified health plans.  But before health plans can be certified, they must have their rates and forms approved by the states.  And before that can happen, insurers must determine what plans they will offer and what premiums they will charge.  Yet insurers cannot establish their plans and set their rates until they know a lot more than they do now about the rules they are going to have to play by.” In other words, the administration had better “roll up its sleeves and get to work.”

Meanwhile, President Obama still must contend with ornery governors, and rebellious states. “In an ominous sign,” Jost notes, “Missouri passed a ballot initiative prohibiting state officials from cooperating with the federal exchange in its state,  and authorizing private lawsuits against any official who cooperates.”   (Thanks, Missouri–just what we need, lawsuits against officials trying to do their jobs..)  “Whether this is constitutional remains to be seen,” says Jost, who is a constitutional expert.

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