By Robert Kuttner
The Boston Globe, July 18, 2013
The cost of Medicare, the top driver of runaway entitlement outlays, seems to be stabilizing at last. For the past three years, Medicare inflation has moderated to an annual average of 3.9 percent. But if you look more deeply, a lot of these supposed savings are actually a shift in costs to patients. As Congress and the administration devise new ways to restrain Medicare, this disguised form of rationing is likely to worsen.
In order to cut costs — actually shift them, partly to hospitals and partly to patients — Medicare applies extreme financial pressure on hospitals to book admissions as outpatients whenever possible. This shifts them from Medicare Part A (the hospital program) to Medicare Part B, which is designed to cover only doctor bills. The hospital gets paid a lot less and the patient gets stuck for a lot more.
Medicare does this through outside, for-profit vendors known as “recovery audit contractors,” who are paid based on how much they save Medicare. They achieve savings by punishing hospitals after the fact if a patient who might have been booked as an outpatient is classified by the admitting doctor as an inpatient. The contractor only gets paid when it overturns a medical decision — which sure seems like a gross conflict of interest. The hospital not only doesn’t paid at the inpatient rate, it doesn’t get reimbursed at all.
The big players in the system — hospitals, doctors, insurers — spend a small fortune working to game it, while patients remain in the dark. Thirty years of cost containment efforts using market incentives, beginning with the creation of health maintenance organizations in the Nixon era, have not altered the fundamental inefficiencies in the system. The more complications the forces of cost containment add, the more money the big players spend working the rules.
The latest fad in the ideology of using commercial incentives and intermediaries to contain costs goes under the name of consumer-directed care. The idea is to combine tax-favored “health savings accounts” with high-deductible health insurance plans and to rely on the consumer’s capacity to shop around for the most suitable plan. But as the system becomes ever-more convoluted, the idea of consumers having the knowledge or market power to intelligently navigate it is laughable.
Medicare has been one of the crown jewels of American social policy. Historically, it has been far more cost effective than the commercial parts of the system because it has far fewer middlemen. Today, however, instead of being a model of a comprehensive national system that provides Medicare for all, Medicare is at risk of being pushed into the commercialized model that has made the rest of America’s health system such a costly and inefficient mess.
The risk is that as Congress seeks Medicare savings, it will require the Centers for Medicare and Medicaid Services to come up with more such self-defeating cost-containment tricks. Gimmicks that take money out of Medicare are the wrong means to address the federal deficit. The reform of Medicare is properly part of the larger project of getting a comprehensive and universal health coverage system.
If you have time, you should read the full article: http://www.bostonglobe.com/opinion/2013/07/18/medicare-disguised-form-rationing/W6sF7dkTW08oGOlSekzlFI/story.html
Comment:
By Don McCanne, M.D.
A prevailing meme is that patients are going to have to bear more of the costs of health care if we ever expect to bring costs under control. Although there are far more equitable and effective methods of controlling costs, this dangerous concept of the need of the patient to become financially engaged is now pervasive.
The private insurance industry has been quite innovative in developing both direct and indirect methods of shifting more health care costs to patients, thereby slowing the increases in premiums, which in turn keeps their insurance products more competitive. This places the health and the finances of patients at risk.
Employers are now adopting changes to their benefit programs with the same goal of shifting more costs to patients. Employers, of course, are interested in controlling the costs of their health benefit programs. This also places the health and the finances of patients at risk.
What is revolting is that this alarming trend has now extended to Medicare, presumably with the intent of shifting costs from the government to the patients. This too places the health and finances of patients at risk. This is totally unnecessary since the government has the power to pay the right amount for the right care – a power that insurers, employers and individual patients do not have.
Is health policy in the United States to be driven by a highly flawed meme? A meme that harms patients’ health and finances? As Robert Kuttner says, “the reform of Medicare is properly part of the larger project of getting a comprehensive and universal health coverage system.” Patients should really care about this. Your health should not depend on how much green stuff you have in your pockets.