The Changed Paradigm
President Johnson signing the Medicare Act 1965
The United States transitioned from a 1000+ year-old model
of fee for service to a third party payer model. In
1965, Congress created Medicare under Title XVIII of the Social Security Act to provide
health insurance to people age 65 and older, regardless of income and younger
people with disabilities. The purpose for this transition was to create
a safety net for the retired individuals to have healthcare when their
individual resources were fixed and no new source of revenue was available to
them. It was a great boon for the elderly. The payment model was quite simple:
after the physician interaction, a form was submitted to the CMS Medicare by
the patient and within six weeks the money was processed and the patient paid
directly. The public viewed it, massaged by the relentless media, as a
transition from a horse drawn buggy to riding the Mercedes.
Medicare Assignments
Soon the polity decided that if the physicians participated
in accepting assignments, they would be paid a small premium over the normal
costs as a bonus and all payments would then be sent directly to the
physicians. This had a two-fold advantage for both the patient and the
physician. The patient did not have to outlay for the initial bill and the
physician under most circumstances did not have to wait for the patient to be
paid in order to receive his or her remunerations. The physicians lined up in
droves and those that didn’t the market forces forced them into the fray
eventually. After all the population was not getting any younger.
The time value of money was definitely on the government and
the patient’s side since the six-week and sometimes more delay in payment due
to processing delays, favored the two entities and not the physician who had
already expended work and energy some time ago. Why quibble about minor things?
ICD codes and Denials
Lo and behold as things became complicated with the ICD
coding promulgated by the Government and created by the AMA at a cost of
millions to the taxpayers, to use as measurable metrics, the decisions
regarding payment of legitimate expenses for rendered care resulted in an
automatic 12% denial. This denial was willy-nilly and reasoned as poor
interface of paper submission. If the physician office who was the direct
recipient of the monies was not on top of perfect paper submissions with the
right “ps” and “qs” a denial would be generated by the central (Medicare) and
peripheral (Non-Medicare Insurers) planners. The interface between the patient
and physician remained at the health level but the cost of that care was now
directed towards the government and third party insurance. And if the
physician’s office with its burgeoning staff, to accommodate the bureaucracy,
was equally incompetent and limited in knowledge of processing the claims, then
the physician suffered an economic blow that became apparent to him or her at
the end of the year (since physicians by their very nature are not business
people). Once the bulb of understanding was lit, it was already too late,
further claims resubmission could not be processed because of the 90-day
resubmission rule at the Insurer level. So the dragnet of financial squeeze was
in place.
Electronic Submissions of Claims
Along came the digital age and every office had to now
perforce of mandate employ the digital mode of claim transmission. Well as you
might have guessed the initial processing was quicker with a 3-4 week return on
the claim. Suddenly the denial rate increased many fold because of the missed
“.” and “,” in the generated claims report. Additionally quasi rules of
payments were conjured up based on soft “evidentiary” rule-making. This
resulted in denials for “appropriateness of care.” The once reasoned arguments
for reimbursements now became unreasonable. Given the electronic submission of
data, an automatic audit was created to evaluate “appropriateness of care.”
Never mind the complexity of the care given, if there were too many
high-complexity claim submissions a report was generated to chastise the
physician and ultimately used as a denial of services or better yet there was a
demand for return of payments via automatic Audits.
As the utilization of the services increased, due in part to
an aging populace and because of the multiple co-morbid states represented on
the ICD coding method, the healthcare spending rose dramatically, climbing
first to12% and then up to 17% of GDP in 2010. With one eye on payments and the
other on the spiraling costs, the Insurance audits increased in frequency and
more and more human resources were employed in the game of “I did!” against
“you did not!”
Alarms and Bells of all shapes and sizes rang out loud and
clear that this was an unsustainable progression of events and that something
needed to be done to harness this wild and intemperate healthcare beast.
Medicaid, Municipalities, Bankruptcies and Employers.
The model promised and promulgated by the central planners
was to provide Universal Healthcare but in conceiving of this largesse they
failed to take into account the costs that would be incurred. The states
already whimpering in their own financial straits were looking at their own
fiscal cliffs of insolvencies and many decided they did not want to partake in
the management of the ever-increasing Medicaid eligible individuals because it
would collapse them into bankruptcy. A large gaping hole yawned ahead of this
conceived healthcare agenda. Physicians, reeling from the non-payment and
low-payment model of Medicaid reimbursement cancelled their participation in
the Medicaid services, leaving several thousands of the low-income people under
the Medicaid rolls without caregivers. (The cost of care delivery exceeded the
reimbursements ~an untenable situation for private practitioners). This impact
was felt at the state and municipality level who were left without money and a
bloated bag of IOUs. However they paid themselves handsomely all the same. In fact four municipalities in
California alone declared bankruptcy due to unsustainable costs of rendering
services and paying for their own heath benefits and those of its employees.
The Universal Coverage model was fast becoming a forced reality with ultimately
the Federal Government will end up undertaking the care of the Medicaid
eligible individuals. (Not to mention the employers who shun healthcare subsidy
for their employees and agree to pay $2000 fine to save $12000 in premium
coverage for the same would result in a sea of uninsured individuals, filling
the Medicaid rolls). The burgeoning rosters of people needing medical help and
little available provisions of care for the same became a dilemma where
something had to be done. The falconer was losing sight of the falcon.
IPAB, P4P and EBM.
The only route to control costs was rationing the expected
care, Committees like IPAB and NCAB were established to figure out the
appropriateness of care delivery. (This scenario has yet to play out). Not
withstanding the demands of the elderly and the poor the scenario seems replete
with cost curtailment by acronyms like P4P (pay for performance) and EBM
(Evidence Based Medicine). The problems with eaxh of these, remains as to how
does one consider performance? The P4P is already being played out, and as all
such implied top-down simplicity faces the day of reckoning, the physicians
realized that the really sick patients would reduce their (the physicians)
performance numbers. So they stopped accepting complicated cases and referred
them to the tertiary centers. In time the tertiary centers saw their “health
grades” dip due to high costs and poor “performance” and that racked the ivory
tower industry to the core. Suddenly articles populated the journals decrying
that P4P doesn’t really work and a better system needs to be in place. What was
good for the goose was not apparently good for the gander.
As far as the “Evidence Based Medicine” scenario is
concerned, it was based on the shifting sands of the word, “Evidence.” In
medicine, as in all fast changing fields, today’s evidence is tomorrows “What
were we thinking?” that if latched on to, will exact its own pound of flesh.
EMRs.
The metrics for measurable intent was falling apart and
along came the EMRs (Electronic Medical Records). The federal government
initially enticed the physicians with subsidizing the cost of implementing such
hardware and software requirements (you pay now and we will determine
“meaningful use” later and reimburse part of your expense) and then lowered the
boom by saying that those that did not implement EMR in their offices would be
penalized annually on an incremental basis, starting at a 1.0% reduction in
their Medicare reimbursements.
SGR and the “Doc Fix.”
The only thing left to tackle by the bureaucrats was the SGR
(Sustained Growth Formula) whereby the physicians were being paid for services
rendered through the CMS system. The polity seeing the red climbing the
financial charts decided that to keep the costs down, the doctors would have to
have a cut in their payments. So new formulas were used and to achieve the
required cuts in healthcare costs, a 21%, then a 24.7% and finally a 30% cut
had to be made to the physician reimbursement to recast the resources to
service the millions of newly added individuals to the healthcare roster. The
problem here was that using such draconian measures and using them as the sword
of Damocles, forced the physicians to bow out of the Medicare system. After all
being a physician is still not considered “indentured servitude.” The
policy-makers fearful of a backlash from the voters unable to pull the lever,
keep kicking the can forward because they can’t stomach losing their privileged
seats in the halls of Congress where entitlements are sprinkled everywhere and
everything is for free all admixed with a pension that would make CEOs of a
large company blush!
Meanwhile the physicians who had private practices initially
employing one or two individuals as office staff suddenly found themselves with
10,11 or even 12 members of the staff each fulfilling some regulatory
requirement. The cost of rendering care suddenly seemed insurmountable. They had
to find alternatives. Many closed their offices; some turned into
entrepreneurs, chefs, businessmen and women while others found shelter in
hospitals working as hospitalists.
Hospitalists and Outcomes.
Hospitals, too had to remake their image and those that did
not venture into the new grid of such forced compliance, or were serving the
indigent and poor patient clientele became victims to the financial losses and
closed doors. The nonprofit large institutions and most for-profit hospitals
were happy because they controlled the physician behavior through their
paycheck and rallied large resources to pay their CEOs and CFOs. Many small
hospitals merged with larger ones as promises were made and appointments to
storied positions meted out to the acquired administrative staff. The
consolidation resulted in a safety for the hospitals as 83% of the newly minted
doctors out of residency wanted to be on the hospital payroll and forfeit
independence to this new form of subjugated practice of medicine. This number a
short four years before was at 18%.
Time forces reality to rear its ugly head eventually; a
review of the costs suggested that the cost of rendering patient care by the
hospitalists and hospitals had, via this model skyrocketed, actually doubled.
The AHA lobby along with the patient advocacy groups continued the pressure on
the policy-makers not to cut costs to the hospitals. Meanwhile in the dimly-lit
rooms astride the large chambers, future is being planned to reduce the
salaries of the physicians and base it on productivity. Some will feel the
pinch of a pink slip soon. After all something will have to give and it will be
the new, expensive employees. A substitution will be needed. Always ratcheting
down payments to the new incoming “eager to change the world” doctors,
indoctrinated in the cost-conscious, arbitrary “appropriateness of care.”
Back to the Envisioned Future.
From a global perspective given the limited resource of
physician and no plans to increase recruitment of younger minds into the medical
field, a band aid is being offered by convincing the laity that other
“providers” including nurses, physician assistants, and nurse practitioners
could function as ancillary physicians and “better” care would be rendered. The
experts cite the European and the United Kingdom models. (In UK, five years ago
a bill in the parliament was floated to allow nurses to perform major abdominal
surgeries ~ it was defeated by one vote). Alas what they don’t include is the
6-month wait for specialists, an equal wait for surgeries, multiple
cancellations of surgeries, lack of new life-extending medicines and a medical
staff embedded in the bureaucratic morass unable to lift itself from a recliner
to render care to the sick. They, the policy-makers also figured that these
“providers” would receive a lower reimbursement because of their education and
everyone would be covered. Unfortunately the seams of this fabric seem rather
frayed. The hue and cry from the public used to “I want it now” over equity
will be loud and clear soon.
So what is the answer to this demand and desire for a "controversial" substitution model as the standard bearer for all healthcare in the land.
Maybe some answers in the next discussion.
References:
UK model of Healthcare under NHS
Patient Harm under NHS
General Practioners complain about patient harm.
Total projected cost of PPACA
PPACA cost and options for Employers
Medicare Law 1965
Bankruptcy in Municipalities across US
EMR Mandate
Medicare Assignments
The Rise in the number of Hospitalists
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