Repairing the Healthcare System

Problems With Medicare Part D

 

Stanley Feld M.D.,FACP,MACE

I have discussed Medicare Part B and Part F in recent blogs. A reader asked about Medicare Part D

 

Dr. Feld 

“Please discuss Medicare Part D, the drug benefit plan available to seniors. It is very complicated and completely confusing to me.

My physician gave me a prescription for Levequin 500 mg once a day for 10 days. The pharmacist told me it would cost me $330 dollars. Medicare Part D would pay an additional $110 dollars for a total of $440 dollars.

 I asked the pharmacist if there was a generic equivalent. The answer was yes. It cost $10 dollars.

 This is unconscionable. It is highway robbery.

Sincerely

a.g.”

 

Several issues are presented in this readers note. It is essential to understand these issues. The issues are an indictment against government “controlled” programs.

On Drugstore.com the price for “Levaquin - 500mg Tablets  is 185.98 for 10 tablets. 

"There is a generic equivalent ; Levofloxacin is a 3rd-generation fluoroquinolone antibiotic, marketed by Ortho-McNeil under the trade name Levaquin in the United States.  Levofloxacin was launched in the Japanese market in 1993". 

The generic version of Levaquin is Levofloxacin. Levofloxacin 500mg tablets cost $51.08 for 30 tablets or $17.08 for 10 tablets. Wal-Mart’s price is less at $20 for 30 tablets. 

Levaquin is marginally more potent than Cipro, which also has a generic equivalent. Wal-Mart’s price for 30 tablets of ciprofloxacin 500mg(generic Cipro) is $20.  

  I am sure the reader’s physician did not know the differences in the prices of the drugs.

The Medicare Part D benefit was created to help senior citizens pay for their medication at affordable prices. If a person has an illness that needs medication that person has to be able to afford the medication. Taking the medication is important to prevent the complications of chronic diseases. It is well established that 90% of the Medicare healthcare dollars are spent on treating the complications of chronic diseases.

Adherence or compliance with prescribed medication is only about 50%. Compliance was lower before Medicare Part D. Many seniors had to make a choice between food and medication. Many seniors still have to make the same choice.

Tzu said 2500 years ago,

“Today’s battles are information battles because information shapes both perception and opinion.  Those who use it to both and attack and defend will win, those who do not will lose”.

The healthcare insurance industry controls the data for both employers and the government. It is the administrative service provider for both employers and government.  It is no surprise that it is the winner. The losers are patients and the government.

United Healthcare will pay AARP $4 billion dollars over seven years to be the only provider of AARP’s Medicare Part D plan.

Does anyone think United Healthcare does this if they thought they would lose money?  Part D is supposed to be a plan subsiding drug benefits for seniors. The government is supposed to set premiums for all seniors regardless of health risk.

Last year United HealthCare’s net income from Medicare Part D was over $1 billion dollars. United Healthcare expects this net income to increase in the future as more baby boomers qualify for Medicare Part D coverage using AARP’s exclusive United Healthcare Part D plan.

 Despite all the profit from Medicare Part D in 2008 the premium for seniors increased from $25 to $28 per month per senior in 2009. The premium started at $14 per month per senior 2006. In 2011 the premium has increased to $41 per senior per month. Medicare Part D’s premiums are paid for with after tax dollars.  United HealthCare’s profit from Part D has grown even higher.

Dennis Kucinich said. "It’s clear that they didn’t want me upsetting their multi-billion dollar applecart,"

"The health care plans of the invited candidates preserve and promote the interests of for-profit insurance and pharmaceutical companies at the expense of tens of millions of everyday Americans who either can’t afford coverage or are being over-charged for the inadequate coverage they struggle to afford."

I believe the government’s intentions were good. However, after vested interests manipulated the rules and regulations, Medicare Part D has turned out to be less effective and more costly than anticipated for both seniors and the government.

The government and seniors are being ripped off by the healthcare insurance industry. The government is doing nothing about it.

Medicare Part D premium provides coverage until prescription costs reach $2830. After $2830 the patient pays 100% of the drug cost until his out of pocket expenses reach $4550. Thereafter, the patient pays 5% of the drug costs and the government subsidies the remainder.

The co-pays before patients reach the “donut hole” varies depending on the drug and the healthcare carrier. Co-pays for generic drugs are $4. Co-pays for healthcare insurance carriers preferred  branded drugs are $25.  Co-pays for healthcare insurance company’s non-preferred drugs are $54 or more. This is the reason for the $330 dollars co-pay in the readers note.

The total costs are added to the amount credited toward patients “donut hole” even though the patient paid the co-pay.

It is confusing for intelligent people. Just image how confusing it must be for an 85 year old with some disabilities and limited income.

Consumers can buy a month supply for a generic drugs at Wal-Mart for $4 cash without a charge being made to their donut hole. Some healthcare insurance companies charge $20-40 dollars toward the donut for a $4 generic drug. The insurance company pays nothing for the drug because the consumer already paid the $4. None of these maneuvers are transparent. The healthcare insurance company controls the data.

Despite all of these co-pays and insurance premiums, the government spends $51 billion dollars a year subsiding Medicare Part D.

Something is wrong. It must be money wasted by the CMS bureaucracy, faulty CMS oversight of the healthcare insurance industry or non-transparent pricing by the healthcare insurance industry.

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

 

 

 

 

 

 

 

 

More On Medicare Part B’s Hidden Tax Increases

Stanley Feld M.D.,FACP MACE

Medicare Part B is not cheap!

In addition to the increase in premiums for Medicare Part B, there are additional hidden costs. These hidden costs for care could be viewed as a hidden tax.  These costs have been increasing yearly.

The government’s cost to fulfill its obligations to the Medicare entitlement program has increased yearly. The Medicare premium increases have not covered the government’s increased costs. The government has increased seniors’ Medicare deductible in order to cover some of its expense.

At the same time, the government has blamed the increased costs on increasing physicians’ fees. Physicians have not been able to increase their fees for several years.

Physicians are the most disorganized and least represented of all the healthcare stakeholders. They are the easiest to attack. Physicians’ reimbursements have, in fact, consistently been decreased.   

An increasing number of physicians are opting out of accepting Medicare. Patients pay physicians directly. The patient then submits the bill to Medicare. Medicare reimburses patients directly.

Physicians are under no obligation to accept Medicare’s allowable fee schedule when they do not accept Medicare. Physicians’ fees are generally higher than Medicare’s allowable fee. The full fee represents a further increase in the cost of Medicare coverage.

If physicians accept Medicare, they are required by law to accept Medicare’s allowable fee.

Many physicians have stopped accepting new Medicare patients. This has intensified the physician shortage for seniors. It has also resulted in decreasing access to care.    

I received a note from a reader asking me why he had to pay $182 dollars to his internist for an office visit and an x-ray. He has Medicare Part B and Medicare Part F (Medigap) insurance. He thought this coverage would pay the entire fee. He paid cash and eventually received $2.24 from Medicare.

He stated he did not have to pay anything for a previous visit.  

I asked him to send me the Medicare explanation of benefits(EOB). It   made no sense.

In studying the explanation of benefits several things became clear.

1. His internist stopped participating in Medicare.

 2.He did not tell this to the patient.

3. The internist told the patient that the $182 covered his annual Medicare deductible.

The description of Part B coverage in the Medicare manual is as follows;

“Part B: (covers Medicare eligible physician services, outpatient hospital services, certain home health services, durable medical equipment)

• $162.00 per year. (Note: You pay 20% of the Medicare-approved amount for services after you meet the $162.00 deductible.)

Additional information about the Medicare premiums, deductibles, and coinsurance rates for 2011 is available in the November 4, 2010 Fact Sheet titled, "Medicare Premiums, Deductibles for 2011" on the www.cms.gov website.”

The patient also had Medigap (Medicare Part F). Part F covers Medicare Part B deductibles and the 20% co-pay of Medicare allowable charges. It also covers Skilled Nursing facilities allowable charges and Medicare Part A deductible plus 20% of the co-pay for Part A. Part A covers hospitalization.

“Medicare Supplement Plan F covers:

• Basic benefits including 
  • Hospitalization: pays Part A coinsurance plus coverage for 365 additional days after Medicare benefits end
  • Medical Expenses: pays Part B coinsurance - generally 20 percent of Medicare-approved expenses - or copayments for hospital outpatient services
  • Blood: pays for the first three pints of blood each year
  • Hospice care: pays Part A coinsurance

 

In addition to the basic benefits, Plan F also provides coverage for: 

• Skilled nursing facility care
• Medicare Part A deductible for hospitalization
• Medicare Part B deductible for medical and hospital outpatient expenses
• Medicare Part B excess charges (This is the difference between what a doctor or provider charges and the amount Medicare will pay up to Medicare's limiting amount)
• Travel-abroad medical emergency help

If this patient went to a physician that accepted Medicare, he would have been fully insured. In this case the physician did not accept Medicare. The physician omitted attaching the patients Medicare Part F coverage information in submitting Medicare Part B form for the patient.

By not accepting Medicare, physicians are allowed to collect their entire fee from patients. The physician billed the patient $182.86. Medicare allowed $164.78.

The patient’s Medicare deductible for 2011 is $162. Therefore Medicare paid the patient $2.78 for a total of 164.78. Physicians are permitted to “balance bill” when not accepting Medicare.

His physician can collect and keep the additional $28.08. If he accepted Medicare, it would be against the law to collect and keep the extra $28.08.

As Medicare continues to reduce physicians’ reimbursement, physicians, who in the past accepted Medicare, are dropping out and directly billing patients.

If this patient’s Medicare Part F information were attached to the Medicare Part B bill, Medicare would have sent the allowable fee explanation of benefits to the Medicare Part F carrier. The Medicare Part F carrier would have sent the allowable fee for his deductible of $162 to the patient.  

In 1999 the yearly deductible was $100. It increased to $110 in 2003, $124 in 2006, $131 in 2007, $135 in 2008, $133.50 in 2009 and $162 in 2010.

Additionally, Medicare Part F premiums have increased each year. It is not sensible to be without Medicare Part F coverage.

Patients must be aware of the coverage details. They must learn how to read the explanation of benefits (EOBs). They must make sure they are not overcharged or mischarged.

Part A, hospital coverage, is even more complex and confusing.  Many overcharges can be found when studying the EOBs.   

Medicare coverage is not cheap.

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

 

 

Medicare Premiums Are On The Rise

Stanley Feld M.D, FACP,MACE

President Obama’s campaign’s many promises have turned out to be false. His pledge to not raise taxes for people earning less than $250,000 has turned out to be a lie.

“I can make a firm pledge.  Under my plan, no family making less than $250,000 a year will see any form of tax increase.  Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes,” 
President Obama, September 12, 2008

Many seniors live on a fixed income. Many live on interest and capital gains from their retirement plans in addition to social security benefits.

In 2003 congress passed the “The Medicare Modernization Act. (MMA)” The act is known for establishing Medicare Part D, a prescription drug benefit managed by private insurance.

Medicare Part D has turned out to be a cash cow for the healthcare insurance industry. It has not been a tremendous benefit to seniors. Medicare Part D’s premiums have been increasing each year. Medicare Part D’s premiums are paid for with after tax dollars.

The MMA also made significant changes to Medicare Part B.  Most seniors were not aware of the changes to Medicare or implications for Medicare Part B coverage at the time of passage of the bill to law.

Millions of seniors depend on the universal, “affordable” healthcare insurance coverage Medicare provides.  

Medicare Part B premiums are based on means testing or  the modified adjusted income (MAGI.)

Under the previous law, all Medicare beneficiaries were required to pay a premium equal to about 25 percent of Medicare Part B program's total costs. The remaining 75 percent of the programs costs were financed through general revenues.

The MMA through MAGI, however, radically altered this formula by linking premiums to seniors’ income. Included in income is salary, earned interest, pension distributions, annuities, bond distributions, capital gains and social security income.

The more seniors earn from any source the more they pay in Medicare premiums.  

As a result, wealthier seniors pay a disproportionately higher premium than other seniors.

Means testing is done automatically. CMS connects to the Internal Revenue tax returns of seniors and calculates the MAGI for the following year.  

This is “redistribution of wealth” plain and simple. This means testing results in the higher income seniors paying premiums ranging from 35 to 80 percent of the Medicare program's total costs per person aside from the senior already paying into the system during his working days.

In 2011 single taxpayers with MAGI up to $80,000 pay no surcharges for their Medicare Part B. Joint filing taxpayers with MAGI up to $160,000 MAGI will not pay a surcharge.

An individual who makes over $80,000 per year had a rate increase from $98.20 to $109.80. A senior couple making over $160,000 per year experienced a rate increase from  $111.16 for each individual to $153.72 per month for a total of 317.44 per month or $3809.28 per year.

The $3809.28 is deducted from their social security distribution. The premiums are paid with pre tax dollars. Medicare Part D and Part F premiums are paid with post tax dollars.

The basic Medicare rates have increased yearly since 2007 and are scheduled to continue to increase through 2015.

President Obama raised the rates above the schedule Medicare premium for 2012 from $153.72 per person to $161.50. This represents a “hidden” tax increase by the Obama administration for people under earning under $250,000.  

It gets worse. People earning $200,000 to $300,000 experience an increase from $130.60 to $219.60 per month per individual as a result of means testing. 

Seniors in the top bracket will have their Medicare premium increased of from $169.49 to $369.36. President Obama has increased this premium $18.00 per month per individual above the scheduled increase.

The increase in Medicare premiums represent an increase in taxes for seniors that worked hard all their life in order to have extra money to enjoy retirement.

President Obama is increasing the tax on seniors with income from any source between $80,000-250,000 per year. This is contrary to his campaign pledge.  

President Obama’s fib is not surprising when we look at his attitude toward people who were productive and earned extra wealth.

 “I don’t want a deal in which I am able to keep hundreds of thousands of dollars that I don’t need, while a parent struggling to send her kid to college finds they have a couple thousand dollars less in grants and student loans.”

 President Obama believes in “redistribution of wealth” with government control of the redistribution. He does not believe in economic incentives for individuals to earn money and save it for retirement.  

President Obama’s beliefs are not compatible with the American Dream. His beliefs will lead to the destruction of American’s innovative entrepreneurial spirit.

 

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

 

 

War On Obesity: Part 19

 

 Stanley Feld M.D.,FACP,MACE

In February 2010, Michelle Obama announced her “Let’s Move” or “Healthy Food Financing Initiative” to combat childhood obesity.  President Obama announced that his administration would provide $400 million dollars toward his “Health Food Financing Initiative” run by Michelle Obama. Its goal was to bring grocery stores and healthy food retailers to underserved urban and rural communities across the nation. He would subsidize the purchase of healthy food for the under-served. 

What about the non-underserved communities and its obesity rates?

“The other elements include helping parents make healthy eating and lifestyle choices for their families; serving healthier food in schools; and increasing physical activity among the nation’s youth.”

 By August 2010 in a special session of congress the initiative grew to a $26 billion dollar subsidy distributed to the states.

The increase in funding for the initiative escaped public scrutiny.

“The Democratic congress passed a special session bill that epitomized everything people hate about Congress; a bill to help states was passed with $26 billion in money that was offset with strange accounting measures.”

This was shortly before the November 2010 elections. It was part of President Obama’s scheme to “redistribute wealth.”

Republicans and some Democrats reacted to the size of the initiative. President Obama’s administration moved money from other programs to fund the initiative and claimed the initiative did not increase the deficit.

Nancy Pelosi punted on Democrats’ and Republicans’ calls for debate before voting. The traditional media did not report the controversy.

“The two authors of the letter, Representatives James McGovern (D.-Mass.) and Keith Ellison (D.-Minn.), said, “This is one of the more egregious cases of robbing Peter to pay Paul.” 

The occasional public service announcements by Michelle Obama about the initiative are slick.

 

 Everyone agrees that obesity is bad for your health and bad for the skyrocketing healthcare costs. The nation’s perception about food and exercise must be changed. The poor and underserved are not the only ones that need to be educated.

America just keeps getting fatter. Obesity has continued to rise even after Michelle Obama started her initiative.

A comprehensive state-by-state report titled 'F as in Fat' shows that obesity rates continue to climb, along with diabetes and high blood pressure.

Two decades ago, not a single state had an obesity rate above 15%. Now all states do have an obesity rate of above 15%.

“In the last 15 years, the report said, adult obesity rates have doubled or nearly doubled in 17 states. Two decades ago, not a single state had an obesity rate above 15%. Now all states are above 15%.”

 

The states with the highest levels obesity are states clustered near the Gulf of Mexico and Atlantic coasts as well as states along the southern Appalachian Mountains.

Alabama is the state with the highest obesity rate and one of the highest rates of Type 2 Diabetes Mellitus at 12.2%.

Twelve states with high obesity rates have had a significant increase in Diabetes as well as hypertension.  In Alabama, the hypertension rate is 33.9%. In Mississippi, the report found that 34.6% of adults have high blood pressure.

 Obesity among African American adults was higher than 40% in 15 states. Among Latinos, it was greater that 30% in 23 states. Latinos with obesity have a higher incidence of Type 2 Diabetes. The incidence is greater than 20% in most states.

In Caucasian adults, obesity rates were higher than 30% in four states. However, any percentage rate of obesity is going to lead to chronic diseases, increased complications of chronic disease and subsequently increased healthcare costs for that person and the state.

Michelle Obama’s initiative is partially correct. There are two vital conceptual errors. The emphasis is on kids in poor neighborhoods. All $26 billion dollars is going to be spent in under privileged communities while the epidemic includes all ethnic and socioeconomic groups.

Most importantly, the parents of the obese children are the drivers of food choices. The change must come from the parents. The parents must be taught to understand the risk of obesity and the consequences of that risk. There are many ways to accomplish this for less than $26 billion dollars.

Anita Dunn was President Obama’s communication director in 2009. President Obama called her one of the most valuable people in his administration. She left the administration and is now the head of SKDKnickerbocker a public relations and lobbying firm.

She has taken on Michelle Obama “Lets Move” initiative by managing a campaign for a group called “the Sensible Food Policy Coalition” The group includes General Mills, Kellogg, PepsiCo, Viacom and Time Warner.

Read that last line again. You get it?

 

It is easy to visualize why this group of companies would be opposed to eliminating empty calories from kids’ diets. It would mean a lot of lost revenue. Time Warner and Viacom would lose a lot of advertising revenue for its various TV channels advertising junk food to kids if Mrs. Obama’s initiative were successful.

 

“Consumer groups say the food lobby is aiming to capitalize on Dunn’s connections, particularly among Democrats more sympathetic to nutritional guidelines. The Center for Science in the Public Interest said Dunn and her firm “should be ashamed.”

Dunn dismissed the criticism.

“Without resorting to personal attacks, everybody should be able to work together towards a common goal here,” she said. “At the end of the day, combating childhood obesity is not a question of what gets advertised but a matter of more exercise, healthier eating habits and working together.”

 Ms. Dunn’s statement is lame. It should be about doing the right thing. Unfortunately neither Michelle Obama nor Anita Dunn is doing the right thing.

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

 

 

 

 

Healthcare Costs: Who Gets The Money?

Stanly Feld M.D., FACP, MACE

The National Institute for Healthcare Management Foundations report also contained data on the amounts of money each provider received for patient care.  There are important take home points in the data.

The data was obtained from newly updated figures of the National Health Expenditure Accounts (NHEA), the official estimator of health care spending in the United States.

During the period from 2005 to 2009 healthcare spending rose, and premiums for private health insurance increased an average of nearly 15 percent per year.

In the last two years private healthcare premiums rose 35%. The 35% increase occurred in anticipation of the healthcare insurance industry being forced by President Obama’s Healthcare Reform Act to provide healthcare insurance to high-risk consumers at the same premium as lower risk consumers.

Physicians have been blamed for increasing fees and over testing. The reality is physicians have experienced decreases in reimbursement for their services.

It is true some physicians over test to defend themselves from lawsuits. Tort reform is essential to decrease the practice of defensive medicine. Texas has reversed this trend with its new tort reform laws. Few other states have followed.

How healthcare dollars are distributed is revealing.

The United States spent $8,086 per person for healthcare in 2009 . Total healthcare spending as a percent of GDP reached 17.6 percent in 2009. It is expected to increase in the coming years.

In 2005, the United States spent $6,827 per person on healthcare.

 

             Who Gets The Money?

 

                   2005/person      %        2009/person      %

Hospital Care                 $ 2071               36         $2471            31

Physicians and Lab        $1417               20         $1646            20

Home Healthcare           $ 869               13          $1066            13

Rx + Medical Devices     $910                 13         $1066             13

Dental and other           $473               7           $548                7

Non Medical Expense    $1109                 16         $1289             16

 

There are many important points to be made about these numbers.  Let us assume these numbers are close to correct.

1. Hospital services include inpatient and hospital-based outpatient, home health care connected to hospitals, nursing home and hospice care connect to hospitals, as well as the services of inpatient pharmacy and resident physicians.

The higher the obesity rates the higher the incidence of chronic disease. The higher the incidence of chronic disease the higher the complication rates from chronic disease. This results in higher utilization of hospital services. 

Each hospital service has an inflated markup. Remember the $45 dollar aspirin.

Hospitals with resident physicians are subsidies. These hospitals receive higher reimbursement than other hospitals. 

Hospitals collected 36% of the $8,086 dollars for patient care. It is obvious that reducing the number of hospitalizations for the complications of chronic disease would reduce the total cost of care.

 2. The physician and clinical services category reflect the care provided by physicians (MDs and DOs) in their offices and freestanding outpatient care settings and services billed independently by freestanding laboratories.   

It is obvious that physicians do not receive 20% of the per capita spending for medical care.

Laboratories that do lab tests, x-ray studies, MRI scans, CAT Scans and Ultrasound share reimbursement for this category. Unless physicians own the laboratories, they do not share in the reimbursement. It would be important to know the percentage of physicians that own those independent laboratories. 

Physicians own a small but growing percentage of laboratories. It is difficult for a physician or group of physicians to make a living from cognitive reimbursements alone. Physicians needs to collect ancillary laboratory fees to stay in business.  

 

Companies owning these laboratories are secondary stakeholders. They feed off the intellectual property of physicians. 

It is fair to say that physician reimbursement is half of the 20% of the dollars spent of medical care in this category. Physicians’ reimbursement for care is 10% or $708 of the $8086.

 3. $1,100 or 13% goes to other secondary stakeholders for care provided by freestanding home health agencies along with other long-term care providers include freestanding nursing homes, rehabilitation facilities and continuing care retirement communities with on-site nursing facilities (assisted living). Other non-traditional settings and providers receiving reimbursement include school, worksite health clinics, residential mental health/substance abuse treatment centers, some ambulance providers, and services provided through Medicaid home and community-based waivers.

 

There are many independent companies involved it the home healthcare business. Medicare patients utilize the majority of these services. The fees charged by the Home Healthcare agencies are high. These Home Healthcare agencies know how to pile on the services in order to receive better reimbursement. These agencies receive much more than the family practitioners who referred the patients.

 4. $1,100 of the $8086 is spent for purchases of prescription drugs, durable medical equipment and other medical products.

Pharmaceutical companies receive a large and growing proportion of the healthcare dollars spent for medical care but not the entire 13%.

How many advertisements do we see on television for electric wheelchairs totally paid for by Medicare? How about home glucose monitors? If it were not a very profitable business, we would not see so much direct to public advertisements.

5. The care given by dentists and other non-physician health care professionals including chiropractors, optometrists, podiatrists, private-duty nurses, and physical, occupational and speech therapists are included in this category.

Dentists and other non-physician healthcare professionals consumed 7% of the healthcare dollars for medical care.

 

The study is inaccurate for this category. It does not capture the actual money spent for dental care. Dental insurance usually provides poor coverage. Most dentists do not accept dental insurance and most people do not have dental insurance.

If we assume most of the cost should be attributed to the other healthcare professionals, these healthcare professionals receive as much or more than physicians.

The difference will become greater because President Obama is going to reduce physician reimbursement 30% on January 1, 2011.

 6. The last group is money allocated as direct patient care but is considered non-medical. This expense totals 16% of the healthcare dollars. It is included as a patient care expense and not overhead used to calculate premiums using the  Medical-Loss ratio formula.   

Healthcare insurers have insisted that typical business expenses to improve patient care should not be calculated into the Medical-Loss Ratio. The industry lobbied President Obama’s healthcare team and achieved its goal. 

President Obama made this deal with the healthcare insurance industry in exchange for its support of his Healthcare Reform Act. 

These non-medical care expenses are included in direct medical care. These expenses are 16% of the $8086 dollars per capita. These expenses are;

a. The cost of verifying the credentials of doctors in its networks.  

b.The cost to ferret out fraud by identifying doctors performing unnecessary operations, procedures, and tests.  

c. The cost for programs (help desks) to try that keep people with chronic diseases such as diabetes out of emergency rooms.

d.The healthcare insurance industry believes it should be entitled to expense sales commissions paid to insurance agents.

e. It wants to expense taxes paid on investments.                                         

 Healthcare insurers insist that typical business expenses should not be considered part of the Medical-Loss Ratio.   

President Obama has insisted that the Medical Loss ratio should be reduced to15% from 20-30 %. This means that the healthcare insurance industry can add an additional 15% above expenses paid for direct patient care when calculating insurance premiums.

The additional 15% is for healthcare insurance companies salaries and other expenses.

The total premium percentage the healthcare insurance industry takes off the top is 31% under present rules. Previously the healthcare insurance industry took between 35% to 45% of the total healthcare dollars paid into the system. 

 

                                    The Take Home Points

1. The healthcare insurance industry receives an excessive percentage of the healthcare dollar.
2. Physicians receive a surprising low percentage of the healthcare dollars.
3. Hospitals receive a large percentage of the healthcare dollars because of pricing standards and the increasing numbers of patients with chronic disease.
4. Ancillary stakeholders receive a greater percentage of the healthcare dollars than physicians.

 

President Obama’s Healthcare Reform Act cures very few of these problems.

 

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

 

 

 

Healthcare Costs Are All About Chronic Disease Management

 

Stanley Feld M.D., FACP,MACE 

The National Institute for Healthcare Management Foundation is a nonprofit, nonpartisan organization focused on healthcare. The foundation just published an excellent report on the distribution of  healthcare costs in the population.

The results indicate that reducing healthcare cost is all about reducing and managing chronic diseases.

U.S. healthcare spending has sharply increased between 2005 and 2009 by 23 percent from $2 trillion to $2.5 trillion per year.

This is a result of a combination of factors. Chief among them is the increasing incidence of obesity. 

Who spends the money?

 Five percent of the population is responsible for 47% of all health care spending in the United States. Ten percent of the population accounted for 63.3% of the expenditures.

Fifty percent (50% percent) of the population accounted for only 3% of the healthcare expenditures.

The low cost person spent $233 in 2008 for healthcare services. Those in the top half of spending cost insurers, the government, or themselves $7,317 a year. The top 1 percent cost $76,476 per year. These are discounted fees not retail fees.

Healthcare expenditures were concentrated among a small group of high-cost patients. These high cost patients were older patients (over 55 years old) with one or more chronic diseases. If they were young and they had one or more chronic diseases healthcare expenditures increased. The more chronic diseases a patient had, the higher the likelihood the patient would be in the top 5% of healthcare dollar utilizers.

Fifty percent of the top 5 percent of healthcare spenders had high blood pressure, a third had high cholesterol, and a quarter had diabetes. The incidence of hypertension, hypercholesterolemia and adult onset type 2 Diabetes Mellitus is directly proportional to the presence of obesity.

It is logical to conclude that as the incidence of obesity and its severity increases the complications of obesity (hypertension, hypercholesterolemia, and Type 2 Diabetes) will increase.

It follows that healthcare costs will increase as a result of the increasing incidence of obesity. America must control the obesity epidemic.

Little progress is being made to decrease the increasing incidence of  obesity or Type 2 Diabetes.

In a perfect world, if obesity could be decreased, the incidence of chronic disease would be decreased.

In a perfect world, if the patients with chronic diseases could be taught to self-manage their disease, healthcare costs would decrease because the incidence of complications of chronic disease would be decreased by at least 50%.

 The treatment of the complications of chronic diseases is the most costly healthcare expenditure.  

President Obama’s Healthcare Reform Act mentions prevention and chronic disease management. There are no concrete incentives for patients to learn how to manage their chronic diseases. There are no specific financial incentives for physicians to develop facilities to teach patients to mange chronic diseases.

Americans are in for a long and costly dysfunctional healthcare system to the disadvantage of consumers and physicians.

President Obama’s Healthcare Reform Act puts consumers in a passive dependent position. Consumers need to be put in a proactive position to care for and be responsible for their health and healthcare needs.

Physicians have to have incentives to teach consumers to be self-reliant.

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

 

 

 

Where Is The Transparency and Accountability In Obamacare?

 

Stanley Feld M.D., FACP,MACE

President Obama where is your promise about transparency and accountability in Obamacare?

A major problem in the healthcare system is the lack of transparency and accountability. It has been unchecked for a very long time.

Both primary and secondary stakeholders act in their self-interest. These stakeholders have had ample opportunity to be non-transparent and non-accountable. All the stakeholders have abused the healthcare system. 

I hit a nerve with my last blog “Patients And Physicians Must Control Costs”. Multiple readers responded with the usual comments:

“Patients are not smart enough to handle their own healthcare dollars.”

“Your basic idea makes sense, but in reality I doubt that a patient knows enough to make intelligent medical/financial decisions, because there are too many unknowns and variables.”

“Physicians over use the fee for service system in order to make more money.”

“If a physician tells a patient that there is only a 1/10,000 chance that an MRI will yield something useful, if the patient doesn’t have to pay for it, the patient wants the MRI. 

 Patients (consumers) must be taught and motivated to manage their own healthcare dollars. Patients’ choice can create competition among physicians and other stakeholders for the consumers’ benefit. Consumers can force the entire healthcare industry to be transparent and accountable with the appropriate government support. 

In 2011 with an ever-evolving consumer oriented Internet few consumers would  buy appliances or electronic gadgets without reviewing the many comparative reviews by experts and consumer peers on the Internet. 

If consumers feel their plumber is ripping them off, they would join Angie's List to find a new plumber. Angie's List has forced transparency and accountability on plumbers in order for them to stay in business. Angie’s List has empowered consumers.  Consumers who do not care about being ripped off can continue to use those non-transparent non-accountable plumbers.

The hotel and restaurant business has experienced the same with consumer driven Internet sites such as Trip Advisor and Open Table. Many other B-C Internet sites have empowered consumers to make choices for their advantage. 

This is called free market forces. It can happen in medicine. It must happen in medicine. It is not wishful thinking.

Americans do not want politicians and bureaucrats to make their healthcare decisions for them. 

President Obama and Dr. Don Berwick are not interested in market forces or in respecting congresses constitutional responsibility. They are interested in dictating healthcare policy by executive order. One such executive order has recently created a political storm in congress.  

“Democrats and Republicans are joining to oppose one of the most important features of President Obama’s new deficit reduction plan, a powerful independent board (independent Physicians Advisory Board) that could make sweeping cuts in the growth of Medicare spending.

"Last week, in his speech on deficit reduction, Mr. Obama said he wanted to beef up the board’s cost-cutting powers in unspecified ways should the growth of Medicare spending exceed certain goals."

President Obama’s goal is to have an unelected commission make healthcare decisions for the electorate without the check and balance of the electorate or congress. 

Representative Allyson Y. Schwartz, a Pennsylvania Democrat prominent on health care issues, said: “It’s our constitutional duty, as members of Congress, to take responsibility for Medicare and not turn decisions over to a board. Abdicating this responsibility, whether to insurance companies or to an unelected commission, undermines our ability to represent our constituents, including seniors and the disabled.”

President Obama doesn’t care. He is going to ignore the protests from both Democrats and Republicans.

Congress has given him the authority to do what he thinks best with its passage of his healthcare reform act.

Britain is turning away from the National Health Service and its Independent Physicians Advisory Board called the National Institute for Clinical Excellence (NICE). It has not saved money.   

Both Democrats and Republican have realized they have given President Obama too much power. 

 Because Britain is an entirely socialized medical system, NICE wields power over the health care options of all residents of Great Britain.  IPAB, initially, will make decisions regarding only the government-administered programs of Medicare and Medicaid. 

Americans have more freedom of choice at the moment. This freedom will disappear if President Obama gets his way.

 NICE is "health cost watchdog" that assesses everything medical, from new technologies to drugs and clinical procedures, and issues guidelines for their use by the NHS. These guidelines include criteria by which certain patients will be made ineligible for both routine and life-saving procedures. The method is known as Comparative Effectiveness Research and Evidence-Based Decision Making. 

“Our insurance companies weigh costs as well, but there is a difference. If your insurance company denies access to a procedure you feel you need, you have recourse through the company's own appeals process and, if need be, the judicial system. Both parties to the dispute have incentive to reach an accord: the patient wants to get well, and the insurance company's wants to avoid subverting its profit motive through legal action, which says nothing of the bruising a lawsuit lays upon its commercial image.

When you are denied a test or procedure in the British system, you get to ask them to reconsider...and then you are invited to go pound sand.” 

To President Obama this advisory board is the first step in his non-transparent quest for complete control of the healthcare system by the executive branch of government.

How many of you ever have reviewed a hospital bill or doctors bill after Medicare or private insurance have paid? How many of you have concluded that the bills are incomprehensible?  

Physicians, just as patients, receive EOB (explanation of benefits). Physicians’ EOBs are equally as incomprehensible.  

Physicians, hospitals, insurance companies, and pharmaceutical companies must be accountable for their charges and treatment recommendations. 

Why should a cancer treatment cost $37,000 per treatment? How much money did Medicare or Aetna pay that provider for that $37,000 treatment? How much did the provider pay to the pharmaceutical company for the medication? What should the true cost of the medication be? How much did the provider mark up the charges to the patient?

It is easy to remember the $45 dollar aspirin charges by hospitals.  What was the mark ups along the way? Are there providers in the area that charge less and get comparable results?

An Independent Physicians Advisory Board could do all the research for consumers (patients). It could help patients decide on the value of the treatment. It could allow for consumer input as does Trip Advisor and others.

All the information should be available to consumer on the Internet by either the   government agency or a private organization. 

There should also be an effective appeals process for the provider. 

 Consumers should make their own choices and not be forced to be dependent on the government for their healthcare choices.

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

 

 

Patients and Physicians Must Control Health Care Costs

Stanley Feld M.D.,FACP,MACE

The primary stakeholders in the healthcare system are patients and physicians. The incentives for patients and physicians to save money are non existent. The secondary stakeholders have taken advantage of non existent incentives to create a healthcare system that generates ever increasing costs.

Patients and physicians are the only stakeholders that can control costs. They initiate the use of the healthcare system’s resources. 

Healthcare costs for medical procedures such as an MRI or CT scan have been found to vary by as much as 683% in the same town, depending on which physicians patients choose, according to a study by Change: Healthcare.

The implication is that individual physicians are responsible for the differences. Most physicians do not own MRIs, CAT scanners or PET scanners. Secondary stakeholders own the equipment. They price the procedures and profit from the equipment, not the physicians.

"There's been a barrage of studies that show differences from region to region," said Christopher Parks, founder of Change:healthcare. "That makes sense — California's more expensive than Alabama. But this 683% is within a 20-mile radius in your own town." 

This finding illustrates several dysfunctional issues in the healthcare system.  President Obama’s Healthcare Reform Act is causing these issues to surface as secondary stakeholders are beginning to adjust to the upcoming changes.

For a pelvic CT scan, they found that within one town in the Southwest, a person could pay as little as $230 for the procedure, or as a much as $1,800. For a brain MRI in a town in the Northeast, a person could pay $1,540 — or $3,500. 

The social contract in medicine is between patients and physicians.  Patients should choose physicians and physicians should care for the patients the best they can with integrated healthcare team approaches. Physicians should be the captains of this team approach. 

Patients should be at the center of medical care and be educated to make wise medical decisions.

Physicians should be the coaches and advisors to patients on how to make wise decisions and attain better health.

In the beginning, patients’ employers provided first dollar healthcare insurance coverage. Patients were not at any financial risk. There was no need for patients to care about medical costs. The healthcare costs were their employer’s problem. 

Healthcare insurance companies enjoyed this setup. The more they paid out in benefits the higher they could raise the insurance premiums. Premium increases resulted in higher profits. It worked until employers said stop.

The insurance companies take 40-60 cents out of every healthcare dollar. Medicare and Medicaid outsource administrative services to the healthcare insurance industry. The healthcare insurance industry also takes 40 to 60 cents out of every Medicare and Medicaid dollar.

In anticipation of a reduction in government reimbursement for Medicare and Medicaid, the healthcare insurance industry has raised private insurance premiums, decreased covered illnesses, increased deductibles and increased co-pays.  

The Healthcare insurance industry is also moving toward  "reference-based pricing."

These changes have increased the liability of consumers for out of pocket expenses as opposed to having first dollar coverage. 

Medicare has different allowable fees for procedures in different regions. Medicare pays 80% of the allowable fee after a patient meets his deductible. Providers are only allowed to bill patients 20%.  By law balanced billing is illegal. It does not matter what providers charge for a procedure. Providers cannot bill patients for the balance of beyond the allowable fee. The Medicare fee is the most the provider can receive for a procedure.

“The Medicare Balanced Billing Program works to protect Medicare beneficiaries from being billed by healthcare practitioners for amounts beyond those approved by Medicare. The program investigates and takes action against those practitioner who violate the law.

Many providers are refusing to accept Medicare payment as Medicare reimbursement decreases. These providers can charge patients their fee. It is the patient’s responsibility to know if providers accept Medicare reimbursement. If providers do not accept Medicare, patients should understand their liability for the fee. Patients are liable for the total bill.   

Providers also contract with private healthcare companies. Some providers try to get the highest fee possible for the procedure. Private insurance companies pay different amounts depending on their need to build physician networks. This results in the wide spread in price in the same area. When providers are under contract with private insurers they cannot collect more than the contract price for a procedure. 

"It was eye-opening," said Howard McClure, CEO of Change:healthcare.

McClure said health plans are moving toward "reference-based pricing," in which they look at the average price of a procedure for a region, then say that's all they'll reimburse. But if a patient does not know how much a procedure costs, he or she gets stuck with the remainder of the bill if it goes above that average price.

"It helps the small business," McClure said, "but the consumer's left out in the cold."

Healthcare insurance coverage is changing with “reference-based pricing.”  Consumers are getting stuck with the retail price for procedures. The healthcare industry is using this to keep premiums down for business and compete for employer business.

Only consumers owning their healthcare dollars can stop this. President Obama cannot unless he controls the entire system and dictates prices. It never works because people figure out how to get around restrictions.     

Patients are led to believe that physicians are sending patients to higher priced providers for procedures because physicians will make more money.

Most physicians do not know the prices patients are charged for referred procedures.

Most physicians do not own MRIs, CAT scans or Pet Scanners. It is against the law to receive kickbacks.

It is essential that providers make their fee transparent to all providers and consumers.  Then consumers can choose wisely and create price competition.

Consumers must drive this process to create competitive pricing. Third party payment does not work.

 Consumer driven healthcare using the ideal Medical Saving Account will make it happen. It is the only model that makes economic sense.

 Consumers would start caring about the price of services when making healthcare decisions.

The challenge is to teach consumers to change their mentality toward healthcare costs and force providers through competition to be accountable for these costs.   

This will never happen under President Obama’s administration.  His goal is to empower the government and not consumers. Under President Obama’s administration the healthcare system will become more dysfunctional and further increase the deficit to unsustainable levels.

 

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

 

 

 

 

Punch Ball In Claremont Park, The Bronx (NY) 1945-1953

 

Stanley Feld M.D.,FACP,MACE

My brother, Charlie Feld, and I grew up in the Bronx. Our neighborhood was a typical Bronx lower middle class neighborhood.

 

Our parents did not have discretionary income to have us take tennis,swimming or skiing lessons. We had to play free Street Games. Each section of the Bronx has a little different twist on each Street Game. 

My brother and I talked about writing a book about all these games a few years ago. We never got around to it. These games played an important part in our childhood memories. They need to be memorialized. 

Many of the games centered on a Spalding ball. It was called a Spaldeen. The Spaldeen cost five cents. It lasted a long time.  It was a pink ball a little smaller than a baseball. The Spaldeen’s shape could be changed by pressing in its walls. The deformity added to the tricky movement (stuff) on the ball’s flight through the air.

 

 

 

Spaldeens are having a revival. You can buy a set of three for $7.95 at Flaghouse.com http://www.flaghouse.com/SPALDING-Spaldeen-High-Bounce-Ball-Set-item-11089

or a dozen Spaldeen knock offs at Amazon for $14.95 http://www.amazon.com/Rubber-Ball-Hi-Bounce-Spaldeen-Spalding/dp/B0035ZD04A 



I decided to record my memories of these childhood games after playing with my 7 year old granddaughter the other day. She is involved in tennis, gymnastics, swimming and skiing. She never heard of Punch Ball. She has never seen a typewriter, either. 

My son didn’t have a Spaldeen so I used a tennis ball and taught her how to punch a ball. It was a big hit. The trick in Punch Ball is not to toss the Spaldeen up as you would a tennis ball. You punch it with a slight flip to maximize your control over the force and direction of the ball. 

Punch Ball is one of many games low overhead games that used a Spaldeen. I will describe as many games as I can remember in the coming months. 

 The only piece of equipment needed was a Spaldeen. Lots of kids carried their own Spaldeen in their jeans back pocket. 

Punch Ball could be played with three to ten guys on each team. I do not remember playing Punch Ball with girls. The field could be anywhere available from the street to a dirt spot in the park, a concrete softball field or a kid’s playground with a fenced in sandbox. 

Punching the Spaldeen into the sandbox was fun. It also produced runs.   

We needed a larger field as the number of players increased.  We often moved to the concrete softball field from our dirt triangle outside the softball field.

The rules were baseball rules without stealing bases.  

If three players were on each team there was a first baseman, a second baseman (only two bases) and an outfielder. The idea was to punch the ball between the fielders and run the bases. The dirt field had many cracks and stones on the surface. If the Spaldeen hit a crack or stone it took funny hops. These hops served to improve our ability to field grounders. 

If you got on first you were not allowed to lead off base when the next puncher was up. 

The Spaldeen was flexible and its bounce was high. If a puncher was proficient he could hit it past the outfielder and score a run. He could also put stuff on the ball by pinching it.  The Spaldeen then travelled through the air like a knuckle ball. It was very hard to catch.  

If we had to play in the street, the bases were the parked cars. In the park the bases were usually two trees, two baseball hats or two hankies held down with stones. If a player used his hankie his mother was not very pleased when he came home with a filthy hankie.

We had a great three-man dirt field with two trees adjacent to our concrete softball field.

I remember playing Punch Ball for hours on end. I always came home filthy from the dirt and the dust. It was wholesome fun and cost nothing. I also become a pretty good baseball (hardball) infielder as a result of my punch ball experiences.