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!