Repairing the Healthcare System

Are Physicians Are The Cause Of The Dysfunctional Healthcare System?

 

Stanley Feld M.D.,FACP, MACE

I wish all my readers a Happy and Healthy New Year!

I would like to thank everyone for continuing to read my blog.

Hopefully, healthcare will become more affordable, easier to access, and not be rationed in the years to come.

I do not think these goals will be reached with President Obama’s healthcare reform act. I think his healthcare reform act will make good medical care more unaffordable and less available.

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I should like to react to Dr. Lucas Restrepo’s article on Kevin MD’s website. Kevin Pho M.D. does a wonderful job presenting all sides of the healthcare reform issue.

Dr.Restrepo’s article entitled “Progressive Commercialization of American Medicine” misses the causes responsible for the dysfunction of the healthcare system.

I am a retired clinical endocrinologist without a billfold interest in the practice of medicine. I am the founder of a Clinical Endocrinology practice started in 1970. I was the first practicing Clinical Endocrinologist in a free standing private practice in Dallas, Texas. At that time few people knew what a Clinical Endocrinologist was or did.

I started my Clinical Endocrinology practice without knowing anything about business. I was not taught anything about the business of clinical practice in my training at academic institutions.

I had to learn about the business of clinical practice in order to survive and feed my family. I had to teach myself the value of my intellectual property.

Dr. Restrepo is a neurologist at the UCLA Medical Center (Los Angeles, California) and the Barrow Neurological Institute (Phoenix, Arizona). It sound like he is a full time salaried physician. He does not have a need to understand the business of clinical practice. He also does not have to understand the potential value of his intellectual property. If he does not perform satisfactorily for UCLA’s administration he will be terminated.

Dr. Restrepo starts his article by quoting Sir William Osler:

“ Medicine, wrote William Osler, is “a calling, not a business.” Patients are not clients, nor physicians businessmen. People do not spend over a decade studying medicine ―living years in poverty or overburdened with debt― merely hoping to get rich. While it is perfectly legitimate to expect a salary that enables a dignified living and financial stability, any medical student who dreams a life of luxury is misguided.”

What is the definition of a dignified living and financial stability versus a life of luxury? Dr. Restrepo leaves the definitions undefined.

I think the definition of a dignified living and financial stability would include the freedom to make medical practice decisions, the freedom to define one’s working conditions and determine one’s time off. It should not include being forced by regulation to accept administrators’ working conditions. Physicians should not be indentured servants.

The fundamental principles sould advocate the primacy of patient welfare, that altruism is the catalyst of the physician–patient relationship, and that “market forces, societal pressures, and administrative exigencies must not compromise this principle.”

Dr. Restrepo implies that physicians’ decrease in their Oslerian moral fabric is the cause of the dysfunctional health care system.

Physicians’ reimbursement accounts for only ten percent of our excessive healthcare costs.

What are the costs generated by the parasites of the healthcare system such as hospital administrators, healthcare insurance executives, pharmaceutical companies and their executives, lawyers, government bureaucrats and lobbyists?

What about the million dollar plus salaries of hospital administrators?

What about the multi-millions to billion dollar salaries of healthcare insurance company executives?

What about the multiple billion dollars a year spent by lobbyist to influence congressional healthcare policy decisions?

What about the $100 to $750 billion dollars spent yearly for defensive medicine and malpractice claims?

These people consume most of the healthcare dollars.

“If health care is deemed a right of every citizen (or more aptly, of every human being), it naturally follows that a legitimate government should protect fully the rights of its citizens and guests (invited and uninvited). “Medicare for all” is the logical and just solution to the argument, but this has not become law. Instead, we have the PPACA, which is a reasonable step forward.

It is easy to blame physicians’ greed for the ills in the healthcare care system. Physicians are an easy target. Remember, when one is sick one needs a good physician to deliver high quality care. One does not need a hospital administrator, a healthcare insurance company executive or a lawyer.

It is easy to say Medicare for all. However the government cannot afford the present Medicare costs because of its outsourcing of the administration services of Medicare and Medicaid to the healthcare insurance industry. The cost of Medicare is not cheap.

Physicians are a small cost to the dysfunctional healthcare system. Most patients and physicians do not understand this reality.

Government takeover of the healthcare system will make access to medical care and affordability of medical care worse. Government should be concentrating on the real problems causing the dysfunction of the healthcare system.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

President Obama, Here We Go!

 

Stanley Feld M.D.,FACP,MACE

State constitutions require states to have a balanced budget. Most states have accumulated large budget deficits.

When President Obama promises to redistribute wealth he means it. His plans are to take federal money and bail out states. He has already bailed out Massachusetts. He gave the state $8 billion dollars for its healthcare plan.

California is on the verge of bankruptcy. California has not shown an intention to become fiscally responsible. I assume California is certain President Obama will bail it out. However, President Obama has a little problem. The U.S. has a large budget deficit. The new congress will be in no mood to fund the state deficits. The U.S. is going to have difficulty attracting creditors unless it becomes fiscally responsible.

Medicaid expenses are a big burden on the states. In some states’ Medicaid consumes 40% of their budget. States cannot become fiscally responsible while carrying their Medicaid burden.

President Obama plans to put 60% of the uninsured citizens into state Medicaid programs. At the same time, he is decreasing state allocated funds for Medicaid. The math makes no sense.

Last week Arizona’s Medicaid stopped paying for transplants. Some states have cut Medicaid payments to doctors, paid bills late and trimmed benefits such as insulin pumps, obesity surgery and hospice care. In California, dentists pull teeth that could be saved because Medicaid doesn't pay for root canals.

President Obama’s healthcare reform plan is causing a rationing of medical care even before it goes into effect.

“Across the country, state lawmakers have taken harsh actions to try to rein in the budget-busting costs of the health care program that serves 58 million poor and disabled Americans.”

“Some states face multibillion-dollar deficits. Federal stimulus money for Medicaid is soon to evaporate. And Medicaid enrollment has never been higher because of job losses.”

Medicaid has become a monster and is eating up the budget in many states.

“In Illinois, Medicaid sucks up more money than elementary, secondary and higher education combined”.

President Obama’s economic stimulus package increased the federal share of Medicaid money temporarily. The economic stimulus money runs out at the end of June 2011. The federal government will go back to paying half the costs of Medical instead of the 60 to 70 percent it pays with the economic stimulus money.

At the same time President Obama’s healthcare reform law requires states not to change the rules on who's eligible to receive Medicaid. States can no longer act independently to determine Medicaid’s eligibility requirements.

President Obama’s healthcare reform act has created rules such as these. These rules are part of the reason states are suing the federal government. The states claim President Obama’s healthcare reform act is an infringement on states’ rights. This infringement on states’ rights has broader implications of the power of the federal government over the states. This was not the intent of the constitution.

This week President Obama’s healthcare reform act had experienced a judicial setback. A Virginia judge declared the healthcare reform act unconstitutional.

Hopefully the new congress will be as aggressive as the States have been in order to protect individual freedoms and the rights of states as intended by the constitution.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

Inside Baseball?

Stanley Feld M.D.,FACP,MACE

Last week a reader made this comment.

Stanley:
I have been reading your columns for many weeks.
The information you provide is mostly inside baseball for the medical community.  How about some focus on the patients?

I disagree. I am trying to help patients and physicians understand that President Obama’s healthcare reform act will be a disaster for patients and patient care. His goal is to destroy the present healthcare system and replace it with a government run single party payer system. He realizes he cannot do it in one step.

He has previously said he prefers a single party payer system but he does not have the votes for a single party payer system.

President Obama’s goal is to set up an irrevocable infrastructure for the healthcare system that will control patient choice. It will extinguish patients’ freedom to choose their doctors and their care despite his public pronouncements.

By eliminating patients’ ability to control their healthcare dollars, President Obama is going to limit access to care and ration care as well. The new infrastructure will eliminate end of life decision making by patients.

His goal is to force patients to be totally dependent on government deciding their healthcare needs. He is determined to control their healthcare dollars. He will waste taxpayers’ dollars on a government bureaucracy that is inefficient and ineffective as he tries to redistribute wealth.

After President Obama’s healthcare reform plan fails, the next step is the public option. The government is not going to close more than two hundred new agencies and start over.

The public option will not be successful. The government will then move to a single party payer system.

President Obama has stated he would protect consumers from the big bad healthcare insurance industry. Yet new regulations, by his ever increasing bureaucracy, have been written. The new regulations will provide the healthcare insurance industry with a guarantee of more customers plus the ability to pile bogus expenses into the benefit expense column.

The healthcare insurance industry will be able to deduct these expenses as benefit expenses and comply with the 80% Medical Loss requirement. The result is less money available for direct medical care.

Medicare and Medicaid are bankrupt. President Obama is not eliminating the profit the healthcare insurance industry makes on Medicare or Medicaid.

How is he going to make universal Medicare and Medicaid solvent by expanding the entitlement to the entire population?

If he keeps reducing physician reimbursement, he will drive the work force out of the system. If a physician refers a patient to a home healthcare agency, the value of the home healthcare nurse visit is at least 3 times the value of a physician visit. The rules are stupid.

Home healthcare is important. Inefficiency in the bureaucracy makes home healthcare unaffordable. It will be rationed in the future.

Rather that fixing the bureaucratic inefficiency which adds no value to direct patient care, President Obama is going to limit access to the care.

A huge problem in patient inability to get efficient care is the problem of defensive medicine and the lack of malpractice reform. President Obama completely ignores this $750 billion dollar a year problem

President Obama is setting up a system that will commoditize medical care. He is destroying the patient physician relationship so essential to good medical outcomes

He is also imposing a mandate requiring consumers to buy healthcare insurance. I believe the mandate is unconstitutional as do at least 30 state attorney generals.

President Obama is not developing an infrastructure to encourage patients to be responsible for their health or healthcare dollars. He is developing an infrastructure making patients dependent on government for medical care.

The only way to decrease the onset of chronic disease is to make it stylish to avoid chronic disease. This can be achieved by effective public awareness initiatives.

President Obama is not providing financial incentives for physicians to create chronic disease management systems to decrease the onset of complications of chronic diseases. The treatment of the complications of chronic disease is 80% of direct medical care costs.

I have tried to point out all the moves President Obama has made toward destroying the healthcare system. The healthcare system will fail. When it does the new healthcare system will subject patients to less than ideal medical care.

Patients/consumers understand all these tricks. President Obama is not adding value to the medical care system

My comments are Inside Baseball comments for both consumers and the medical community. These comments are not available through the traditional media. Physicians and consumers must become aware of what is going on.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

“The Doctor Fix” AMA Faked Out By President Obama

Stanley Feld M.D.,FACP,MACE

It is almost impossible for the average voter to figure out what is really going on in Washington, DC. Politicians are shifty. The internet and blogging has made it a little easier to figure out. .

President Obama has received more criticism than any other president because he is shiftier than most other presidents have been.

It is getting harder to know what is going on because political strategy opposing taxpayers’ interests is formulated in secret.

It intensifies as the traditional media provides cover because of its bias. We miss traditional media sloppiness because we live in a sound bite society.

President Obama promised the AMA he would wipe out the accumulating decrease in physician reimbursement. The 23% is a result of yearly congressional postponements.

President Obama counted the savings resulting from this decrease in physician reimbursement in his cost estimated. He also promised the AMA a permanent fix to the Medicare payment formula. The AMA supported President Obama’s healthcare reform act because of this promise.

President Obama also promised that he would not sign a health-care bill that “adds one dime to our deficits, either now or in the future, period.”

The deficit neutral promise was never plausible. The Democrats’ strategy was to make President Obama’s healthcare reform plan “deficit neutral” by moving the $250 billion dollars in physician reimbursement off the healthcare reform act’s accounting books.

The House of Representatives’ passage of H.R. 3961 wiped out the accumulated Sustainable Growth Rate (SGR) debt off the books. The problem was the Senate had to pass the bill also. The Senate did not buy the trick.

Majority Leader Harry Reid explained the maneuver away at a press conference.

“All we’re doing is wiping the slate clean by adjusting the baseline to what is current policy.”

Senate Democrats strategy was to vote on a stand-alone bill that strips the SGR formula out of President Obama’s healthcare reform bill. The government then makes an unfunded addition to the increase deficit created.

President Obama has made serial promises that cannot be honored. Rather than include the pricey $247 billion plan known on Capitol Hill as the “doc fix” as part of ObamaCare, they’ll instead make this a separate contribution to the deficit, without compensating tax increases or spending cuts.”

Wiping the slate is right.”

 

The Senate voted again to postpone the automatic, accumulating 23% cut in Medicare physician payments, but only through New Year's Day. A house vote rapidly complied.

Democrats left a permanent fix out of the final ObamaCare bill in order to keep the official price tag below $1 trillion.

Democrats planned to pass the $250 billion "doc fix" later in a separate bill, but somehow they never got around to it. Even liberals cannot always conjure up a quarter-trillion dollars on demand.

Many Democrats wanted the fix "paid for" with other spending cuts, real or invented.

President Obama deceived the AMA about the doc fix. President Obama is now deceiving voters about how he will pay for the fix.

Maybe President Obama should concentrate on fixing the healthcare system by doing a few simple things like increasing patient responsibility, decreasing the healthcare insurance industry’s abuse of the system by loading benefit expenses and institute malpractice reform to decrease defensive medicine. He should put patients in control of their healthcare dollars rather than making them more dependent on government and building a bigger bureaucracy.

Instead, he is concentrating on destroying the medical care work force.

I received this note today that says it all about government taking care of us.

Below is a note by a young physician to President Obama. His short two-paragraph letter to the White House accurately puts the blame on a "Culture Crisis" instead of a "Health Care Crisis.” It is worth a quick read: 


Dear Mr. President: 
During my shift in the Emergency Room last night, I had the pleasure of evaluating a patient whose smile revealed an expensive shiny gold tooth, whose body was adorned with a wide assortment of elaborate and costly tattoos, who wore a very expensive brand of tennis shoes and who chatted on a new cellular telephone equipped with a popular R&B ringtone. 
While glancing over her patient chart, I happened to notice that her payer status was listed as "Medicaid"! During my examination of her, the patient informed me that she smokes more than one costly pack of cigarettes every day and somehow still has money to buy pretzels and beer. 
And, you and our Congress expect me to pay for this woman's health care? I contend that our nation's "health care crisis" is not the result of a shortage of quality hospitals, doctors, or nurses.  Rather, it is the result of a "crisis of culture", a culture in which it is perfectly acceptable to spend money on luxuries and vices while refusing to take care of one's self or, heaven forbid, purchase health insurance.  It is a culture based in the irresponsible credo that "I can do whatever I want to because someone else will always take care of me.” 
Once you fix this "culture crisis" that rewards irresponsibility and dependency, you will be amazed at how quickly our nation's health care difficulties will disappear. 
Respectfully, 
xxxxx, MD 

There you have it.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

Medical Loss Ratio: How Did The Healthcare Insurance Industry Do?

Stanley Feld M.D. FACP MACE

The healthcare insurance industry did great with President Obama/Kathleen Sebelius’ new regulation to apply administrative expenses to benefit expenses.

You could never tell reading the disinformation published by the traditional media. The reports were confusing and not informative.

In my last blog I reported that the healthcare insurance industry is trying to influence the regulations for expenses to be counted as benefit expenses for the healthcare industry . The benefit expenses are subtracted from the premium revenue before the 80% medical loss ratio is calculated.

The expenses the industry wanted included are;

1. The cost of verifying the credentials of doctors in its networks.
2. The cost of ferreting out fraud such as catching physicians over testing patients or doing unnecessary operations.
3. The cost of programs that keep people who have diabetes out of emergency rooms.
4. The sales commissions paid to insurance agents.
5. Taxes paid on investments.
6. Taxes paid on premium income.

All these expenses are administrative expenses in my view. These expenses could create a competitive advantage to an individual company. If these expenses are permitted as benefit expenses, resources available for direct medical care would decrease from eighty cents to sixty cents.

Last week Kathryn Sebelius published a fact sheet outlining the details of the new healthcare insurance regulations. The new regulations are clearly to the advantage of the healthcare insurance industry.

 

President Obama declared;

“Today, many insurance companies spend a substantial portion of consumers’ premium dollars on administrative costs and profits, including executive salaries, overhead, and marketing.  Thanks to the regulations , consumers will receive more value for their premium dollar because insurance companies will be required to spend 80 to 85 percent of premium dollars on medical care and health care quality improvement.   If they don’t, the insurance companies will be required to provide a rebate to their customers starting in 2012.”

We saw previously that WellPoint had a Medical Loss ratio of 83% including the six expenses as benefit expenses.

The National Association of Insurance Commissioners (NAIC) was charged to develop uniform definitions and methodologies for calculating insurance companies’ medical loss ratios. The commission was to consider input from all stakeholders. The healthcare insurance industry made 160 comments. Consumer protection groups made only 30 comments.

These regulation will make the healthcare insurance marketplace to be more transparent and make it easier for consumers to purchase plans that provide better value for their money.

This last statement is fiction according to the details in the fact sheet. The healthcare insurance industry won. There was nothing in the traditional media explaining the significance of the regulations.

I will outline the categories in the new regulations. I will describe the defects in detail in the future. President Obama has made another complicated mistake that will destroy the medical care system.

1. Establishing Greater Transparency and Accountability

This information will provide consumers with meaningful information on how their premium dollars are spent, clearly accounting for how much money goes toward actual medical care and activities to improve health care quality.

Right off the bat, the government has permitted the healthcare insurance industry to count activities it categorizes as improving healthcare quality as a benefit expense decreasing the funds available to direct medical care.

2. Ensuring Americans Receive Value for their Premium Dollar

This is an unsubstantiated statement.

3. Providing Rebates to Consumers

Insurance companies that are not meeting the medical loss ratio standard will be required to provide rebates to their consumers.

This will not happen because the healthcare insurance industry still has a high percentage of overhead as a benefit expense counte toward the medical loss ratio.

4. Insurer Reporting Requirements

Beginning in 2011, insurance companies that issue policies to individuals, small employers, and large employers will have to report the following information in each State it does business:

· Total earned premiums;

· Total reimbursement for clinical services;

· Total spending on activities to improve quality; and

· Total spending on all other non-claims costs excluding federal and State taxes and fees.

Unacceptable expenses are not defined.

5. Activities That Improve Health Care Quality

· Following NAIC recommendations, this regulation specifies a comprehensive set of “quality improving activities” that allows for future innovations and may be counted toward the 80 or 85 percent standard

There it is. The healthcare insurance industry can count bogus profit activity in the benefit expenses counted against premium dollars to be spent for healthcare. This is the place of obscene salaries.

6. Timing of Reporting and Rebates

· The first report, containing calendar year 2011 data, will be due in 2012

· Insurers will be required to make the first round of rebates to consumers by August 2012 based on their 2011 medical loss ratio. 

· Expatriate and mini-med plans that report separately will be required to report data to the Secretary on an accelerated basis.

The delay in reporting provides time for modifications of the regulations to the advantage of the healthcare industry

Treatment of Taxes in the Rebate Calculation

• The regulation will allow insurers to deduct federal and State taxes that apply to health insurance coverage from an insurer’s premium revenue when calculating its medical loss ratio. 
• In the case of non-profit plans, assessments they are required to pay in lieu of taxes may be deducted.

The healthcare insurance industry was able to maintain most of its non-value added expenses to its benefit expense column.

The healthcare insurance industry won. Consumers lost and were once more deceived by President Obama.

There were also multiple accommodations made to the healthcare insurance industry in the name of the consumer.

Accommodations to Ensure Continued Access to Coverage by Consumers

Accommodations to Avoid Market Destabilization

President Obama faked us out once again. The press coverage sounded as if the healthcare insurance industry would not be in a position to take advantage of consumers anymore.

I predict consumers will be very upset with the results.

 

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

The Devil Is In The Details

Stanley Feld M.D.,FACP,MACE

President Obama’s healthcare reform act is in the regulations stage. The regulations for the healthcare reform act are controlled by the Department of Health and Human Services.

“The act will reinforce the worst features of existing third-party payment arrangements in both the private and public sectors — arrangements that have already compromised the professional independence and integrity of the medical profession.”

 

I believe President Obama’s goal is to have his healthcare reform act fail so he can move in with a complete takeover of the healthcare system by the federal government.

The healthcare insurance industry is making an intense effort to define critical provisions of the healthcare reform acts’ regulations that will impact its bottom line. The outcome of the regulatory process will also impact the cost of healthcare insurance negatively.

“Senator John D. Rockefeller IV fears that insurers are affecting how regulators interpret the recent health care legislation.”

The law requires health insurers to spend at least eighty (80) cents out of every dollar they collect in premiums on the welfare of patients. The intent of the law should be the insurance industry should spend 80% of premium revenue on medical care.

The question is the definition of medical care. What expenses are included in determining medical care? The healthcare insurance industry wants expenses dedicated to the welfare of patients included as a benefit to be deducted from the 80% medical benefit expenses. The result would be less money to direct patient care.

Here are some of the benefit expenses included in the past. The healthcare insurance industry wants these same expenses included in future premium benefit expenses.

1. The cost of verifying the credentials of doctors in its networks.
2. The cost of ferreting out fraud such as catching physicians over testing patients or doing unnecessary operations.
3. The cost of programs that keep people who have diabetes out of emergency rooms.
4. Some insurers even insist that typical business expenses included — like sales commissions for insurance agents and taxes paid on investments

Healthcare insurers have submitted nearly 160 comment letters so far to the state regulators. Individual state regulators control the recommendations made by Kathleen Sibelius.

Most state regulators have been ineffective in controlling healthcare insurance industry expenses in the past. President Obama has provided funding and educational programs to state regulators to improve their understanding of the intent of the healthcare reform law. State regulators are deciding what precisely the healthcare insurance industry’s suggestions mean.

The meaning of the healthcare insurance company’s requests are obvious. Each expense put into the benefit expense category reduces the amount of money available for direct patient medical care.

Each expense has an overhead and is marked up for profit. The law says the medical loss ratio must be 80-85%. The law also requires the healthcare insurance industry to refund money to consumers if it spends too much on administrative services expenses and the medical loss ratio goes below 80%.

All of the expenses listed are not medical expenses. They are administrative services expenses.

The more expansive the definition of what would be permitted under the umbrella of patient care, the more money the healthcare insurance industry would make and the less medical care the patient could received.

“A lot of what they are hoping to shift over there does not — and should not — qualify to improve an individual policyholder’s quality of care,” said Wendell Potter, a former insurance executive who now is critical of the industry and represents consumers in the discussions with state regulators.

If forced to shift these expenses to administrative services expenses, the healthcare insurance industry would raise insurance premiums. The premium increase would maintain the 80% medical loss ratio required by law.

The healthcare insurance industry has already exercised this option by raising premiums as high as 37%.

The healthcare industry continues to insist that President Obama wants to discount the value of an array of its programs aimed at improving the quality of medical care. These programs should be of patient benefit expenses and counted toward the medical loss ratio..

It’s a joke. The healthcare insurance industry should not be practicing medicine. If they are combating fraud, it is a business expense. This business expense should give them a competitive advantage. Paying broker commissions cannot remotely represent improving patient care. The healthcare insurance companies should be paying physicians to set up diabetes education programs, not setting them up themselves..

Senator John D. Rockefeller IV, said “The health insurance lobbyists failed to beat the health care reform bill in Congress — but with billions of dollars at stake, we cannot and we should not expect them to throw up a white flag and start looking out for the livelihoods of American families,” .

A patient advocate group pointed out that if the six largest for-profit insurers had had to meet the new standards last year, they would have been required to refund $1.9 billion.

President Obama’s administration has already buckled by providing waivers for mini-med plans. It will again buckle to the healthcare insurance industry because it is totally dependent on the infrastructure the healthcare insurance industry provides.

We will hear a lot of noise about how President Obama is reigning in the healthcare insurance industry. He is not going to accomplish anything except reduce access to care, increase the cost of care and ration care while the healthcare insurance industry increases its profit at the taxpayers’ expense.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.