Kickbacks, corruption, and graft are not models for efficiency in health care

‘The Trump administration has labored zealously to cut federal regulations, but its latest move has still astonished some experts on health care: It has asked for recommendations to relax rules that prohibit kickbacks and other payments intended to influence care for people on Medicare or Medicaid.’

So begins the article ‘Trump Administration Invites Health Care Industry to Help Rewrite Ban on Kickbacks’ by Robert Pear in the NY Times, November 24, 2018. The next sentence provides the ostensible motivation for the rule change: ‘The goal is to open pathways for doctors and hospitals to work together to improve care and save money,’ but the sentence immediately after goes to the meat of the issue: ‘The challenge will be to accomplish that without also increasing the risk of fraud.’

The reason that there are anti-kickback laws in any industry is, of course, to prevent fraud. It is bad enough when we discover that a supposed impartial reviewer of a film or a book, or an item we may want to purchase like a car or a computer, is in fact being paid by one manufacturer to recommend their product. It is even worse if it turns out that the product that they are recommending is us, and that someone that we have trusted with our lives and our health, like a doctor, is being paid to send us to a particular lab or x-ray facility or hospital or specialist. Maybe the one we are being referred to is the best one, but it is hard to trust that if we discover that the doctor has a financial interest in that facility, or is receiving a kickback for those referrals. Most people are afraid of this and thus support anti-kickback laws; the exception is always those within the industry who stand to benefit. Surprise! And, it should be noted, it seems to be a core part of the business model of the Trump Organization.

But what about that middle sentence? The one that says that ‘the goal is to open pathways for doctors and hospitals to work together to improve care and save money’? Isn’t that a worthwhile goal? And both the American Medical Association (AMA) and American Hospital Association (AHA) are supporting the proposals. Am I saying that they are crooks or corrupt? Doesn’t it make sense that there can be not only savings but enhanced quality from the efficiencies that can come from such arrangements? How can we realize the efficiencies if doctors and hospitals are prevented from coordination of care?

The answer, as I see it, is “yes, but..”. There should not be unreasonable restrictions to care coordination, provided that they are upfront and obvious to the consumers (patients) such as in health maintenance organizations (HMOs) and the like which use limited panels of doctors, or public hospitals where care is often provided by employed physicians. The core issue, in health care, is to ensure that these arrangements are truly for the benefit of the health of patients, and not mainly to make more money for the providers. When your physician, Dr. Smith, refers you to a particular specialist (Dr. Jones) because they know them and think they are smart, competent and do good work even though another physician across town may have better results by some measures, it may be good or bad but it is honestly being done by Dr. Smith for your benefit. But if you discover that Dr. Jones is paying Dr. Smith for referrals, you might well be chary of the motivation.

There are several important things to remember in this discussion:

1.     Not everyone is, or is likely to become, a crook. There are many, maybe most, individual health care providers (like doctors) who actually care more about people’s heath than profit. There are even some institutional health care providers, hospitals and health systems, that may.

2.     There will always be people and institutions who “push the envelope”, and game the system. They will do everything that is legal, even if it violates the spirit and intent of the law, if it makes them more money. “Give them an inch and they’ll take a mile”.

3.     The looser the rules, the more these people and institutions will game it. There is no reason to suspect that money-grubbing cheaters will be satisfied if given a little more. Think about those (maybe me and you) who routinely feel ok about driving 5-10 MPH above the speed limit on a highway. If the speed limit is 65, we may drive 70 or 75. But if it is 75, we drive 80 or more. Raising the limit on what constitutes corruption will not obviate it.

4.     Carrots don’t work very well to change such behavior, although sticks might work a little better.

Don McCanne recently discussed a study from RAND called ‘Effects of Health Care Payment Models on Physician Practice in the United States’ which described the many different models being employed by various health systems and physician groups in the US, but alertly appened a reference to a NY Times article on October 27, 2018 by Alfie Kohn titled ‘Science Confirms It: People Are Not Pets: Research on the efficacy of rewards tells us that we can’t bribe others into doing what we want’. It reviews the psychological science that there is a difference ‘between intrinsic motivation (wanting to do something for its own sake) and extrinsic motivation (for example, doing something in order to snag a goody). The first is the best predictor of high-quality achievement, and it can actually be undermined by the second. Moreover, when you promise people a reward, they often perform more poorly as a result.’ Indeed, Kohn shows that sticks are not that effective either at changing behavior; I advocate them to some degree because at least they can put the biggest violators in jail!

The Pear article on kickbacks, trying to describe what its supporters see as the good side of loosening restrictions on them, says: ‘‘Federal law generally prevents insurers and health care providers from offering free or discounted goods and services to Medicare and Medicaid patients if the gifts are likely to influence a patient’s choice of a particular provider. Hospital executives say the law creates potential problems when they want to offer social services, free meals, transportation vouchers or housing assistance to patients in the community. Likewise, drug companies say they want to provide financial assistance to Medicare patients who cannot afford their share of the bill for expensive medicines.’ First of all, this is not “likewise”; drug companies who want new customers (and fend off efforts to regulate prices) are different from a hospital or provider offering free or discounted services; extra benefits to attract patients (as opposed to, say, free lunches to attact doctors) are quite different,  provided that these are really free, and the cost is not passed on to Medicare or Medicaid!

There is, in fact, a difference between ‘coordinated care’ and ‘graft’.

Pear also writes ‘‘The Justice Department in April accused Insys Therapeutics of paying kickbacks to induce doctors to prescribe its powerful opioid painkiller for their patients. The company said in August that it had reached an agreement in principle to settle the case by paying the government $150 million. The line between patient assistance and marketing tactics is sometimes vague.’

Vague? This is not vague at all. Creating efficiencies to improve care to patients, and reduce costs, especially to patients, is fine. Kickbacks and graft are not.

Can corporate power continue to keep Americans sick? Maybe the election will help

Do you think that insurance companies should be allowed to deny insurance to people with pre-existing conditions? If not, you are in agreement with most Americans, 81% of whom feel this way according to a survey conducted by the Commonwealth Fund, the Harvard School of Public Health, and the NY Times for the report Being Seriously Ill in American Today (the link is to the Commonwealth Fund site discussing the study, and you can download the PDF there). That is a lot of people, and is why most politicians give at least lip service to the idea. Of course, despite the fact that you may have heard Republicans who are currently in Congress saying that they support it as they ran for re-election, the fact is that virtually all of them voted against it when they voted to repeal the Affordable Care Act (ACA, Obamacare) and, when that was unsuccessful, to strip it of its major impacts. This protection was one of the most important of ACA’s rules, and is highly valued even by most Americans who profess to hate Obamacare, Obama, love Donald Trump and vote for the Republican Party. And this is, in no small way, a reason for the Democratic takeover of the House.

Sadly for the GOP supporters who want their pre-existing conditions covered, their love is not being reciprocated by their elected officials. As discussed by the President of the Commonwealth Fund, David Blumenthal, in an article in The Hill, 20 Republican-led states, led by Texas, are filing suit against the federal government arguing that they should not have to enforce the ACA’s ban on refusing insurance to people with pre-existing conditions. What is more is that the federal government, under the GOP and the Trump administration’s Department of Justice, is refusing to defend the suit; this means that they are not arguing in favor of the law of the land, but more that they are not defending the right of the American people to have this guarantee. Tough luck, 81% of Americans!

Of course, this would not necessarily mean that people with pre-existing conditions (about 52 million Americans, depending upon a fairly strict definition*) would not be able to get insurance, although it is likely that many (such as those with terminal cancer) would not. It does mean that they could be charged much higher premiums for their insurance, though. This would go back to what is called “individual rating” where the individual’s health risk determines the amount of their premium, as opposed to the “community rating” required under ACA. And, of course, as discussed in another Commonwealth Fund brief this would also impact the premiums of those actuarially deemed to be a greater risk: mainly older people (including those Trump and GOP voters), but also for many conditions, women – the majority of the population! Even the insurance companies are not sure what to do as they set their rates for 2019.

It is clear that President Trump is doing all he can to distract people from the result of the November 6 elections – he is a master of distraction – such as by firing Attorney General Sessions the next morning. But the Democratic House of Representatives will not be confining itself to investigations of him and his campaign, but also moving forward with legislation to accomplish what are seen as “progressive” goals, or goals I would reframe as “actually in the interests of the people of the US, as opposed to the billionaires and large corporations. Health care is the foremost of these. It will start with ensuring that the important provisions of the ACA are kept in place, in particular the protection for those with pre-existing conditions. The House can do this because it is current law, and it can block any Senate effort to change it.

Moreover, the House is likely to work on advancing the goal of “Medicare for All” in the coming session. This is the opinion of Sen. Bernie Sanders (D-VT), the most well-known advocate for single payer, makes this point clearly in an excellent interview with Rolling Stone’s Matt Taibbi. This will not pass the GOP-controlled Senate, and may not even pass the House, but the effort will definitely be made and it will have strong support, a big change from the Clinton plan of the 1990s and even ACA when single payer was “not on the table”. Establishment Democrats, beholden to their own very wealthy donors (especially Wall St.) may not be happy to go against corporate America, but they will if they have to and they will have to because their voters want it. As Sanders says, “…it’s wildly popular. And that’s what Democrats have got to do.”

On one side, we have the interests of the vast majority of the American people. There are those without health insurance coverage, including those who would be eligible for Medicaid under ACA if they lived in states that had expanded Medicaid, but have the misfortune of living in Republican-controlled states that did not. This will get better soon, as three states, Idaho, Nebraska, and Utah, just voted to expand Medicaid, and Maine will likely do so now that its soon-to-be-former governor won’t be around to veto it. It is a popular program, even in these “red” states. But those who will still be uncovered in the 14 states that remain is a lot of people. Then there are the people who have insurance, but terrible insurance, with absurdly low annual and lifetime caps, that should not be legal. But they are. Then we have the people who have more “standard” employer based insurance, who are being killed by the premiums, deductibles, co-payments, and co-insurance costs. Then we have those who are on Medicare who are unable to afford a Medicare Supplement policy to cover the things Medicare doesn’t – especially the 20% of the cost, since Medicare covers only 80%. Maybe not so big on a $100 office visit (although $20 is a lot for many people) but a big deal for a $5000 hospitalization.

So how many people is that altogether? I don’t have the numbers, but it is certainly the large majority of the American people. In fact, 90% is probably a conservative guess, which would mean 10% of Americans have insurance with affordable premiums, copays, deductibles, or are so rich it doesn’t matter. Of course, this small group includes not only most legislators, but corporate executives, pundits, and even many liberal leaders. Remember: the median US household income is about $61K, and a household (not individual) income of $150,000 is the top 8% and of $200,000 the top 3.65%!

Who is on the other side? Well, drug companies, consistently the #1 profit industry in the US. Insurance companies, making huge amounts of money skimming from the “health care expense” pool. Large health systems, doing very well, thank you. In other words, incredibly wealthy vested interests and their lobbyists that contribute a lot to politicians. This is not a fair match-up either way, most of the people vs. most of the money.

But maybe the “most of the people” finally have a chance. Wouldn’t that be a refreshing change?