Scamming Medicare: It's the providers and insurers, not the patients!

I have often written about universal health care and favored a single-payer system, or, in its current incarnation, Medicare for All. I still do and will have some more to say about it in a bit, but wanted to begin by providing some recent examples of the outrageous abuses of our non-system of health care. More important, abuses of the people who are supposed to be receiving health care. Actually, it is not so much that these are examples of new practices, but rather that there have been important recent articles exposing them.

In “Where the frauds are all legal” on December 7, 2019 in the NY Times, Elisabeth Rosenthal, an opinion writer, physician, and editor of Kaiser Health News, describes exactly that. Dr. Rosenthal has often written on the same theme, notably in a wonderful book that I have recommended before, “An American sickness: how healthcare became big business and how you can take it back”, but this recent article was precipitated by the experience of her husband following a serious bicycle accident. Dr. Rosenthal describes a number of scams (and they are scams, even if they are legal) perpetrated by the hospital, and gives them cute and memorable names; it is good enough to summarize here.

1.      Medical Swag, such as charging $319 for a plastic brace that was in place for an hour (and you may or may not get to keep it!) and other such goodies, “…like the sling you can buy at Walgreens for $15 but for which you or your insurer get a bill for $120 after it is given to you at urgent care.”

2.      The Cover Charge. This was the $7143.99 “trauma activation fee” charged by the hospital. This was in addition to whatever else was charged by physicians, for x-rays, labs and medical equipment. ‘Trauma activation fees have been allowed since 2002, after 9/11, when the Trauma Center Association of America, an industry group, convinced regulators that they needed to be compensated for maintaining a state of “readiness.”’ But, she asks, ‘Wait. Isn’t the purpose of an E.R. to be “ready”? Isn’t that why the doctors’ services and scans are billed at higher rates when they are performed in an emergency department?’ Note: Dr. Rosenthal in an emergency physician.

3.      Imposter billing. This is when the physician bills for a service that s/he didn’t provide directly, such as when it was done by a resident or PA or NP. Sometimes the physician is on site, sometimes not. But they are billed at the full physician rates. Cool beans. This is what allows some doctors to see a panel of patients in clinic while they are in the operating room at the same time!

4.      The Drive-By. Charging for full examinations (which are documented as full examinations after just a few questions – or even a phone call). Sometimes only a few questions are all that is appropriate, but you can’t – or shouldn’t – be able to bill for a physical examination!

5.      The Enforced Upgrade. Meeting someone in the ER, even for a minor problem, because the office is closed (in the specific case, the clinic the doctors used was open only 2 hours 45 minutes two days a week), causes much, much higher charges.

What is sometimes more amazing to me is that the insurer paid for all these things. Part of the reason is that they have no way of knowing if these upcharges were medically necessary. Sometimes (as pointed out in Rosenthal’s book) it is because they just pass the charges on by raising their premium rates. Of course, insurers don’t pay the full charges – they pay a significant discount. Only uninsured people are expected to pay the full charge!

So these are pretty outrageous, but mostly (as the title points out) legal, if outrageous. Not, however, necessarily legal would be the overcharges and payments from Medicare to certain insurers documented in a report from the DHHS Office of the Inspector General, and covered by the Times in “Federal Watchdog Questions Billions of Dollars Paid to Private Medicare Plans” by Reed Abelson, December 12, 2019. This is a different sort of scam, perpetrated by Medicare Advantage plans. To start with, Medicare Advantage plans are something of a scam to begin with. Why? Well, on the surface, “all” they do is to essentially provide Medicare patients with the benefits of an managed care plan – indeed, often you may an additional premium on top of Medicare to the insurer and you have wrap-around HMO-type coverage. This can be really good for you as a consumer; you can get covered for vision, hearing, prescription drugs (without the need for an additional Part D plan), and copays. What makes it at its essence a scam is that the Medicare Advantage plans get higher payments for a variety of reasons than does traditional Medicare.

One reason is that they tend to enroll lower-risk patients, who cost less to care for. To some degree this is because they have the disadvantages of HMOs as well as the advantages; limited physician and hospital networks and limited portability if you are out of the geographical service area. But most of it is from the way that they are marketed. It is to these insurers’ financial advantage if as many of the high-utilizing, high-cost, older, and sicker Medicare patients are in traditional Medicare, and the ones who are younger, less-sick, and lower-utilizers – thus lower cost – are in their plans. They work hard to make this happen, When the Trump administration pushes Medicare Advantage, as when Center for Medicare and Medicaid Services (CMS) administrator Seema Verma says “What works in the Medicare program is Medicare Advantage — because plans are competing on the basis of cost and quality, driving toward value and increasing choice to beneficiaries,” it is true – but, as with any other for-profit product, it markets its advantages to those most likely to make it money.

Then there are the probably-illegal actions found in this report. Primarily, these result from “up-coding”, having administrative personnel comb the entire medical records to find things that they claim allow them to bill for higher-complexity in patients who have more diagnoses, even when the person providing the care did not address those issues. Hospitals use reviewers to upcode all the time, and sometimes it may be legitimate, in cases in which the care was provided but not completely documented. This “data-mining” approach to upcoding, however, is not. And this is not all. The Times article also notes  that ‘An earlier report from the inspector general’s office also raised concerns about Medicare Advantage, concluding last year that plans were inappropriately denying medical claims as a way to increase profits.’ The amount involved is not chump change; an additional $6.7 Billion in payments in 2017.

So no good either way, “legal” scams by providers (read mainly “hospitals”) or probably illegal scams by insurers. Both illegitimately take our money (whether paid as taxes, premiums, co-pays, etc.) and funnel it toward profit. Would a single payer, Medicare-for-All program prevent this? Yes, although it would have to be the “Improved and Expanded” Medicare called for by the current bills in the House (HR 1384) and Senate (S1129). From the patient point of view everything is covered. From the provider point of view, they would not be able to game the system by upcoding and other techniques. From the insurer point of view, they would not make so much profit.

For too long, healthcare in the US has been a struggle between insurers (who think they pay the providers too much) and providers (who think that they don’t pay enough). The interests of the actual people, patients, taxpayers, rate-payers, are lost in this struggle, crushed by the tectonic plates of those big industries. Many politicians and pundits say we can’t go against them. I say we have to. As Jim Hightower says “Who’s afraid of Medicare for All: Not ordinary Democrats or independents — just insurance companies, lobbyists, and old-line politicians”.

Time to make them put our interests first!

The high cost of medical education: Who should be trained to become doctors?

Medical school is expensive. College, for that matter, is expensive, but medical school is more expensive. According to a consultant website, based on data from the Association of American Medical Colleges,

On average, medical school tuition, fees, and health insurance during the 2019-2020 academic year ranges from $37,556 (public, in-state) to $62,194 (public, out-of-state). Average private school figures come in just below public schools for in-state and out-of-state students, at $60,665 and $62,111, respectively.

That is a lot of money. Per year. Multiply by 4 years. Add books, living expenses (you know, food, rent, like that), and miscellaneous other costs, and it is not surprising that the average medical student graduates a quarter-million dollars in debt.

Of course, if your family is very wealthy, it is not a problem. But given that the mean household income in 2019 was about $63,000, just about a year’s tuition in many of these schools, it would be a stretch for those families to pay such expenses. Indeed, at the 75^th%ile ($113,000) it would be more than half of gross income, and I doubt that even those at the 90^th%ile ($184,000) would find it easy to support a medical student. As medical schools (hopefully) strive for increasing diversity, by income of family of origin, race and ethnicity, and geography (rural vs. urban), this cost becomes a bigger and bigger issue, much more than when only children of the elite (including physicians) attended medical school.

Of course, these students are going to be doctors, on average the highest-paid profession in America. According to most sources, including this one based on a survey on the doctor site “Medscape”, even the lowest-income medical specialties would be easily in the top 10% of income, and several way into the 1% ($475K). (Indeed, the income for those highest-paid specialties seems to be lower than those I have known, who not uncommonly make over $1M.) But even using those numbers, there is a several-fold difference in being in, say, Pediatrics ($212K) or Family Medicine ($219K), and Orthopedics or Plastic Surgery ($500K). It is certainly understandable that, at such high debt loads, the greater income of a high-paid specialty seems more attractive, and may further decrease student choice of primary care (lower paid) specialties. (At a difference of almost $300K a year, a plastic surgeon could expect, over a 30 year career, to earn almost $9M more than a pediatrician! That is real money!)

In addition to their own cost of living, often having to help support, rather than be supported by, a family, is another reality for those who are in medical school and later in residency training. This is a major focus of an important NY Times article on the topic published November 26, 2019, “I have a PhD in not having money”, about the challenges that low-income medical students have, and by extension the challenges for medical schools that really might wish to have a diverse class. The challenge is not only for minority students, who on average come from families with significantly less wealth and income, but across-the-board for students from families with incomes that are not in the higher ranges. It includes most students from rural areas.

In fact, there is an enormously close correlation between students from areas and population groups which are most needed in medicine and those most poorly represented in medical school. In some ways this is a tautology; since doctors are likely to practice in communities like those in which they grew up, poor, minority, and rural communities which are dramatically underrepresented in medical school are the least served. Also, the higher income earned by subspecialists (and, let us not forget, the explicit and implicit encouragement by faculty for students to enter these fields) means that they can practice only in “major medical centers”, places with populations big enough to support a need for that specialty and with hospitals that can provide them a place to practice. Thus, fewer medical students train to be family doctors, who can practice in and are much needed in rural areas, exacerbating the existing reticence of students brought up in cities and suburbs to relocate there.

The Times article is good, but it focuses almost entirely on the issue of paying for medical school. Clearly this is incredibly important. The students featured in it say things like “You have to decide, do you use your loans for a study aid or for a rainy-day fund in case someone at home gets sick?...I haven’t had dental insurance in two years. When tuna is on sale for 80 cents a can, I go buy 30 at CVS,” and “There’s this idea that because we’ll all be doctors one day, the loans don’t matter and it’ll all even out. But that doesn’t account for day-to-day expenses now, like if my mom texts me asking for help.” This begins to get at the larger issues, that it is not only the question of how to pay for medical school, but a variety of related things that characterize students from lower-income backgrounds.

Students from poor families tend to live in poor neighborhoods. Because of the US’ regressive system of financing public education, which depends a great deal on local funds, the quality of the education is likely to not be as good. I refer not to the skill or dedication of the teachers, but the resources to provide additional instruction, instructional support, and special classes such as Advanced Placement. Similar conditions apply in rural areas. Where the student from an upper-middle-class suburb may have many advanced placement classes, especially in sciences, by the time they graduate from high school, and have learned disciplined study habits and been given lots of role models, students from less-well-off school districts are much less likely to have. In a rural area, there may be one science teacher who is shared by more than one district. This gives the more privileged students a leg up before they even start college. Before they start high school. Before they start school altogether.

Then, disadvantaged students have to compete on academic criteria with those from wealthier backgrounds on Medical College Admissions Tests (MCATs), a type of test for which those others have been prepping for years. Medical school faculty on admissions committees often can’t – or don’t care to -- distinguish between the ability to perform well academically and the potential for becoming a good doctor if given the right support. A child of a well-to-do family who has had not only excellent schools but tutors and other support when needed, and who looks like the children of the MD and PhD faculty, might be “hitting on all cylinders” to do as well as they are, while the child of a farm worker or motel cleaner in a rural area may have unlimited untapped potential.

And, yet, it is still more. Producing more doctors from the top income levels means that the communities like those they come from, which already have enough or more than enough physicians, will become more overserved; that the specialties that exist in abundance in those locations will have more members. And lower income communities, rural communities, minority communities, communities that need primary care doctors, will remain underserved. And the health of the US population will be further jeopardized.

Some schools, like Mount Sinai in New York, have eliminated tuition. That is a good thing for the students who are admitted, especially for those who are from low-income families, but it does not explicitly choose students from low-income families. That is a major flaw; it mostly serves to further advantage the most-highly-advantaged students who comprise the bulk of the class. To care for the American people, medical schools need to admit and train physicians who “look like America”, for real, not a few token students in a class mostly comprised of scions of the top 25% or even 10%. This means that the first pass for admission should be demographic – students who come from low-income, from rural, from minority communities, students who don’t look like most current students, students who don’t look like the children of medical school faculty and their neighbors. If there are to be some slots reserved for those who are from privileged backgrounds and overserved communities, they should be for those who are most likely to practice in areas and specialties unlike those in which they were raised, those who have a demonstrated history (not an essay expressing intent) of real service. Were they in the Peace Corps, or AmeriCorps, or Teach for America, or something that actually required extended work and sacrifice?

Those students who are admitted will need maximal financial help, scholarships as much as loans, and even more educational support, so that they can reach their full potential and be able to become the doctors who can help their communities if they choose to return (not all will but they are much more likely to than others). That is what medical school funds should be spent for.

And we need it to start soon. It will be 30 years before currently accepted medical students replace the existing doctors, and we shouldn’t have half-measures.