Health Care Cost News

The most recent defense of the Paul Ryan Medicare-busting plan is that at least Republicans have a plan; Democrats don’t. In fact, there is a lot of Medicare reform written into the Affordable Care Act, although most of the reform hasn’t gone into effect yet. Beyond that, saving Medicare is going to require lowering health care costs overall while increasing revenues, preferably through economic growth. If those last two things are not done, busting Medicare will be the least of our problems, IMO.

The Obama Administration actually is doing stuff to get health care costs under control. This is interesting:

It’s getting personal now. In a shift still evolving, federal enforcers are targeting individual executives in health care fraud cases that used to be aimed at impersonal corporations.

The new tactic is raising the anxiety level — and risks — for corporate honchos at drug companies, medical device manufacturers, nursing home chains and other major health care enterprises that deal with Medicare and Medicaid.

In the past, such companies caught breaking the rules were required to pay fines. So the company would cut the government a check, and the cost of the fine got passed on to customers, and the executives lived to defraud another day. Think Rick Scott.

Now, on top of fines paid by a company, senior executives can face criminal charges even if they weren’t involved in the scheme but could have stopped it had they known. Furthermore, they can also be banned from doing business with government health programs, a career-ending consequence.

Works for me.

By some estimates, health care fraud costs taxpayers $60 billion a year, galling when Medicare faces insolvency.

We were talking about this in the comments recently.

Elsewhere — today the New York Times has a story about one Medicare cost-control plan that’s about to be implemented —

For the first time in its history, Medicare will soon track spending on millions of individual beneficiaries, reward hospitals that hold down costs and penalize those whose patients prove most expensive.

The administration plans to establish “Medicare spending per beneficiary” as a new measure of hospital performance, just like the mortality rate for heart attack patients and the infection rate for surgery patients.

The article doesn’t explain this clearly, I don’t think. The program will compare costs AND outcomes, so that hospitals won’t be rewarded just for being cheap. They will be rewarded for providing better outcomes at lower cost. Obviously, one point to this is to discourage medical facilities from over-treating patients so they can bill Medicare for more money. Over-treatment can be just as detrimental to outcomes as under-treatment.

However, the hospitals don’t like this part:

Hospitals could be held accountable not only for the cost of the care they provide, but also for the cost of services performed by doctors and other health care providers in the 90 days after a Medicare patient leaves the hospital.

I believe I understand why the Administration is doing this, although the article doesn’t explain it as well as it could be explained. I have been reading for a while that a bit items of “waste” in Medicare is the cost of re-admission to hospitals. According to a really klutzy powerpoint presentation by the Department of Health and Human Services, about 30 percent of Medicare patients who are released from hospitals have to be re-admitted within 30 days, and 75 percent of those re-admissions are preventable, and the cost of preventable re-admission comes to $12 billion a year in wasted Medicare money. So, that’s a lot.

In its state data center, the Commonwealth Fund estimates how much money each state’s Medicare program could save if re-admissions are reduced. Mississippi, for example, would save $24,016,832 every year if it could get its high readmission rate under control.

Causes of preventable re-admission include (a) the patient was discharged too soon; (b) the patient developed an infection or pneumonia after leaving the hospital; (c) the patient was discharged to another facility, such as a nursing home, that wasn’t able to care for him properly. The point is that hospitals shouldn’t just kick patients out without at least some communication and coordination with whoever is going to be taking care of them next.

In the article, one hospital administrator has a legitimate gripe, seems to me. He says this policy will be detrimental to inner-city hospitals serving larger numbers of immigrant and uninsured patients. Maybe the demographics of a hospital’s patients ought to be factored into this. But it really isn’t outrageous to penalize hospitals with higher than average re-admission rates, or whose patients need more treatment than other patients with the same conditions after discharge.

Update: See also Kevin Drum.

4 thoughts on “Health Care Cost News

  1. It’s good to keep in mind that insurance providers, corporations whose business is insurance, are just that – in business, and an immensely profitable business at that. The welfare of their customers, note, not patients, is of no concern.

    Profit is their single most important concern. From 2002 to 2006 health insurance corporations increased their profits by 428% and increased premiums by 87%. One-third of every health care dollar goes to private insurance bureaucracy and paperwork, $350 billion/year.

    Doesn’t it seem reasonable that replacing the health insurance consortia with (non-profit) government provided insurance would result in huge savings to the consumer?

  2. I’m all for holding the corporate honcho’s accountable and punishing the executives.
    It’s long overdue.
    It’s like we should be punishing the owners of businesses and executives who knowingly hire illegal aliens – and not just the poor immigrants themselves.

    There is a lot of Medicare and Medicaid fraud. And then there are places where there could be significant cost savings.
    My father, 85, and my mother, 79, are constantly being sent for additional appointments with other doctors and specialists. So many, that sometimes it seems like some sort of money making scheme by recommendations and referrals.
    Regarding readmissions to hospitals, I read an article where in a couple of hospitals they were able to cut the rate returning due to infections significantly by trying a radical new procedure:
    making doctors and nurses wash their hands.

    I can’t find the article that gave the specific numbers, but here’s one that’ll give you the gist:

    Yup, something as simple as having medical professional just wash their hands could potentially save billions of dollars a year.
    You’d think medical professionals might know that.
    Crazy, huh?

  3. I few of my doctor friends admit to gaming the system…leaving no eligible money unspent. Yet the best the GOP seem to have come up with are anecdotes about patients personal habits and how those who seek reform would come between “you and your doctor”…a hackenyed pattern of doing whatever it takes to define the good guys and the bad guys in a way that protects the profits of their largest contributors. They seek to kill not reform.

    Widespread adoption as standards (they’d rather use “regulation”) of best practices by the clinics and hospitals which deliver quality care for less are wantonly mischaracterized as the interference of big gubmint in the lives of those who might be helped.

    Yup, crazy and same ol’ same ol’.

  4. Think Rick Scott.

    That wasn’t necessary .. 🙂 it goes without saying because Scotty has set the bench mark for medicare fraud. When others can only hope for a sizable score Rick Scott has become the Roger Bannister of medicare fraud.

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