DoctoRx was puzzled by a report in Bloomberg that the Mayo Clinic in Glendale, Arizona will “stop treating” certain Medicare patients. Many readers no doubt know that Mayo is touted not just as a model for high quality of delivery of health care services, but also affordability.
Here is the gist of the story:
More than 3,000 patients eligible for Medicare, the government’s largest health-insurance program, will be forced to pay cash if they want to continue seeing their doctors at a Mayo family clinic in Glendale, northwest of Phoenix, said Michael Yardley, a Mayo spokesman. The decision, which Yardley called a two-year pilot project, won’t affect other Mayo facilities in Arizona, Florida and Minnesota….
Mayo’s hospital and four clinics in Arizona, including the Glendale facility, lost $120 million on Medicare patients last year, Yardley said. The program’s payments cover about 50 percent of the cost of treating elderly primary-care patients at the Glendale clinic, he said.
“We firmly believe that Medicare needs to be reformed,” Yardley said in a Dec. 23 e-mail. “It has been true for many years that Medicare payments no longer reflect the increasing cost of providing services for patients.”
Mayo will assess the financial effect of the decision in Glendale to drop Medicare patients “to see if it could have implications beyond Arizona,” he said.
It seems the Mayo move may be a shot over the bow relative to expected Medicare reimbursement cuts:
Nationwide, doctors made about 20 percent less for treating Medicare patients than they did caring for privately insured patients in 2007, a payment gap that has remained stable during the last decade, according to a March report by the Medicare Payment Advisory Commission, a panel that advises Congress on Medicare issues. Congress last week postponed for two months a 21.5 percent cut in Medicare reimbursements for doctors.
DoctoRx commented:
Despite what the article says, It’s not easy under the regs to just charge cash. So I’m not sure what Mayo is referring to. Basically a physician has to drop out of being a Medicare provider in toto in order to then charge freely. Once out, I think you’re out for a whole year (at least). And that includes seeing a patient in hospital who’s a Medicare patient (Medicare “A” covers essentially all Medicare patients). So for a whole year the doctor has to only treat outpatients and have nothing to do with Medicare. Not easy. Especially if Glendale has an elderly population.
He also had these comments about Medicare and costs:
Yes I agree that for primary care docs, it’s tough to make a decent living practicing within the regs. Not only are the rates after expenses to do a basic exam of a patient no better than a waiter’s at a nice restaurant, but because of the amount of documentation the government requires (because of all the fraud it tries to deter), the time spent is significantly greater than the patient sees. Not to mention phone calls the doctor is forbidden from charging for even though his/her lawyer/accountant properly does so.
In New York City, it is becoming difficult to find a decent primary physician (I had a good one who stopped practicing while I was overseas, and my attempts to find his replacement over the last five years sound like a bad Woody Allen movie. Needless to say, I’ve reverted to various stopgaps). My endocrinologist converted his practice to anti-aging because he does not want to deal with insurance (it’s so much more profitable to hand out human growth hormone and HRT and have your own compounding lab to boot). If our primary care system starts cracking, health care delivery will suffer, irrespective of any reform effort.
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I wonder how many more doctors and nurses we’d have if the FIRE economy didn’t pay so well.
Might even have more physicians willing to sit around and teach new doctors, too, so that new medical staff didn’t start their careers with so much debt.
“If our primary care system starts cracking, health care delivery will suffer, irrespective of any reform effort.”
Starts cracking?
It’s already well under way; a family practitioner makes in 2 full days what a urologist makes in a 15 minutes procedure.
Where do you think the residents aim to go?
Specialties, of course!
And let’s not talk about the geriatricians; they are the least paid in the medical profession, while the number of elderly people is growing faster than any segment of the population. If I recall correctly, the US is the only industrialized country in this situation. What i know for a fact is that geriatricians get paid much more per visit than FP and internists in the Province of Quebec.
Which is mere common sense when you think about it. But, what does common sense has to do with market logic?
Things would should be different if the USA had a close-knit homogeneous population.
The essence of colonialism is to pit the tribes each against the others.
Would it?
The Spanish Empire expelled the Jews.
And then later it expelled the Muslims.
But this did nothing to arrest the decline of the empire.
Corrupt and incompetent governments always want to project their failures onto some scapegoat, typically the most vulnerable segment of the population.
Those of us on Medicare will see to it that Obama goes back to Chicago in 3 yrs…a one term president. We vote and we will get rid of him.
I wonder how many doctors we would have if the fing medical schools didn’t limit the number of new students to children of doctors!
Its really pretty simple: a procedure costs 100$ in time, laboratory equipment and personnel for a primary care physician, but medicare reimburses 75$. But if a specialist does essentially the same thing, charges 250$ and medicare pays 200$, everybody but the patient wins. The primary gets a small referral fee for a few seconds work, medicare gets to claim that it is keeping costs under control (HEY, we’re paying less than they’re charging – man, are we smart!!!), and the specialists, who have inordinate influence over the coding and fees of procedures, get 2 or 3X what a general practitioner would get.
My primary can’t make any money monitoring my blood sugar results (I wouldn’t work for free, and I don’t expect him too either) so I see an endocrinologist, who looks at the same data, but charges 3X.
Yeah, we have “insurance reform” which amounts to let’s pay more, without any attempt to rationalize the costs of the services or introduce any competition.
The comment regarding homogeneity is spot on. The majority of other developed nations with universal health coverage, have relatively homogenous populations. This means that the majority of the population shares a common value system that will be distilled into what is and is not covered under basic health care.
The heterogenous nature of our population means that we need a broader suite of services to cover a distribution of services that people here think are necessary.
This issue is completely ignored in cross border health care comparisons.
Is it spot on?
There is no doubt that America’s ruling class exploits racial and other divisions in order to deny social benefits, including universal healthcare, to everyone. Lee Atwater put it bluntly in a 1981 interview with NY Times columnist Bob Herbert:
You start out in 1954 by saying, “Nigger, nigger, nigger.” By 1968 you can’t say “nigger”—that hurts you. Backfires. So you say stuff like forced busing, states’ rights and all that stuff. You’re getting so abstract now [that] you’re talking about cutting taxes, and all these things you’re talking about are totally economic things and a byproduct of them is [that] blacks get hurt worse than whites.
http://en.wikipedia.org/wiki/Southern_strategy
Question: If America’s ruling class didn’t have the race card to play, do you really believe they wouldn’t pull some other card out of the deck?
Question: Do you really believe that blacks, Hispanics and other minorities don’t share the same “value system” that other Americans do?
Bit of a naive second question. Minority groups do tend to have different and distinguishing value systems. You need only observe such things as family size and children with or without two parents. Racial and cultural discrimination is somewhat less than say 40 years ago, nonetheless it is still and element of our color cast class structure.
As to Medicare, as currently constituted it is a political boondoggle. Recall that the origination of company provided healthcare insurance dates back to WWII and wage and price controls. Once imbeded it has progressed to what we have today.
Also, there is precious little actuarially based health insurance offered in this country. Most company provided, or sponsored, plans are a form of self insurance for the employer. What the so called healthcare insurance company provides is a benefit cost administration plan. That is, a contract that purports to limit the costs of medical services that the employer will have to pay for. Along with that plan comes a contract for the administration of employee claims.
Now, medicare is not benefitted by a wage earning population. It is largely dependent on retirees and its stipulated government subsidy. It is an instrument of income redistribution that flows out of the Social Security System. What Medicare would be well advised to consider is the establishment of realistic fee schedules across service providers, specialists and general practitioners. And that appears to be what the Mayo Clinic is addressing.
I often wonder what would happen if Medicare developed a reimbursement structure that was modeled after one of the better private plans. Then you could have the choice of a private plan or the government plan. Now I recognize that such a plan would probably cost more than the current situation, but I wonder; How much more?
Kudos to Yves for highlighting the issue of MD access/availability. Ultimately you get what you pay for. If America wants more and better healthcare for all, the PTB must abandon the pretense that we can do so without devoting a greater share of society’s resources to that goal.
It’s horrifying that Yves, who likely has “good” insurance has trouble in our most populous city finding a good PCP. This is a scandal.
Promotion of junk food, use of cigarettes etc. kill many more Americans yearly than were killed on 9/11/01. We can do better. Sadly, it does not appear as though help is truly on the way.
It isn’t even a matter of insurance, although by bizarre happenstance, my insurance seems not to be terrible (but I have no idea how good it would be for what most people need most, catastrophic coverage, nor am I planning to find out). I often pay and submit for reimbursement.
First, I apologize for the double posting and for a very long posting – but the illogical manner in which the very costs of medical care are obfuscated just gets me going. If no one even knows what they are paying and WHY, we will never have enough resources to get people the healthcare that is useful for them.
http://www.medpac.gov/documents/MedPAC_Payment_Basics_09_Physician.pdf
“Medicare pays for physician services based
on a list of services and their payment
rates, called the physician fee schedule.
In determining payment rates for each
service on the fee schedule, the Centers
for Medicare & Medicaid Services (CMS)
considers the amount of work required
to provide a service, expenses related
to maintaining a practice, and liability
insurance costs. The values given to these
three types of resources are adjusted by
variations in the input prices in different
markets, and then a total is multiplied by
a standard dollar amount, called the fee
schedule’s conversion factor, to arrive at
the payment amount. Medicare’s payment
rates may be adjusted based on provider
characteristics, additional geographic
designations, and other factors.”
If you are not familiar with gubermint bureaucratize, you may miss “provider characteristics” which means in normal language, “specialists.”
http://en.wikipedia.org/wiki/Resource-Based_Relative_Value_Scale
“For example, in 2005, a generic 99213 Current Procedural Terminology (CPT) code was worth 1.39 relative value units, or RVUs. Adjusted for North Jersey, it was worth 1.57 RVUs. Using the 2005 Conversion Factor of $37.90, Medicare paid 1.57 * $37.90 for each 99213 performed, or $59.50. Most specialties charge 200–400% of Medicare rates for their procedures and collect between 50–80% of those charges, after contractual adjustments and write-offs.”
Its like selling the Chevy for 100K, and than giving you a 50% discount. You may think your special caused you got a 50K discount, but your actually a schnook for paying 50K for a Chevy.
The next step is moving everything beyond preliminary diagnosis offshore…
http://tinyurl.com/ygl8gzk
http://tinyurl.com/p6pzo6
Medicare expenses have to decrease, since the outstanding obligation is >$100Trillion. If we cannot do it cost effectively here it will be outsourced.
If most of the money spent on health care is spent in the last 6 months of life, & most of that cost is outsourced, the domestic health care industry could largely disappear. I wonder if health care may turn out to be the 1st bubble of the 2010’s?
If you want a better understanding of the business of medicine, spend some time researching Current Procedure Terminology…aka CPT Codes (and CPT Copyright Infringement).
Be prepared to have your blood boil.
CPT Codes are essentially the currency of medicine. Doctors do not charge in terms of $$ for Procedure (ie $$ for a tosillectomy). Rather, they charge in terms of $$ for Procedural Code.
OK, so what?
For starters, the codes are proprietary. The AMA owns the codes!
Think about that for a moment: The CPT System–upon which our Medicare System is based–is privately owned by the AMA. In 1977, Congress instructed the Health Care Financing
Administration (“HCFA”) to establish a uniform code for identifying physicians’ services, to be used in completing Medicare and Medicaid claim forms. Instead of creating its own code, the agency contracted with the American Medical Association to adopt and use a code of medical procedures previously created by the AMA. The AMA code was embodied in a publication known as the Physician’s Current Procedural
Terminology (“CPT”), to which the AMA held the copyright.
The $$ reimbursement that Medicare pays (ie the US taxpayer) is copyrighted! Thus, the use of CPT codes is strictly limited so that licensing fees can be obtained. [Significant licensing fees to the tune of $70 million for the AMA.] This has the unfortunate side effect of keeping the general public from doing easy comparisons of healthcare goods and services, while benefiting the insurance companies (who do not want those side by side comparisons because they promote competition and transparency).
So…Let’s Pretend:
You have no insurance (or catastrophic coverage only) and you have a persistent sore throat. You need a tosillectomy. You call the doctor’s office and tell them you have no insurance and you get an absurdly high quote…4-5X more than what you would get charged if you had a typical insurance policy.
“OK, what if I find out what Medicare would pay the doctor, call then I’ll call them back and offer the Medicare reimbursement plus a $100. Maybe they’ll take that.”
Surely there’s some kind of service on the web that will help.
Only, there isn’t. The ONLY place you can go to get this kind of pricing info is from the AMA’s website.
At the AMA site you enter “tonsil” as a search and you find the code for “tonsillectomy” is 42820 and the base charge is $293.43. [Hell, I probably risk copyright infringement just for writing that code.]
But what about post-operative care, etc., etc…
What is post-operative recovery even called in the CPT manual?? What about any possible pathology screenings? Seems kind of standard to analyze the defective tissue in the tonsil for the underlying cause of the problem, doesn’t it? How much will that cost? Where’s the code? What’s this type of medical work even called? “Tonsil Pathology Screening”??? What else am I missing???
Well…there are over 87000 CPT codes, so I have no idea as to what I’m missing.
________________
We have a healthcare system where it is estimated that 20-50% is spent on Admin Costs.
We have a COPYRIGHTED CPT protocol replete with 87000 codes that is straight out of Catch 22.
Essentially, it is impossible to inductively assess the cost of your medical care. You can do so deductively, after the fact…but not beforehand. Not when you want to price-shop.
And not a word about CPT in the most recent healthcare “debate”….
If you think the Healthcare Bill is meaningful reform you need to have your head examined.
Or, shall I say:
You need a 56923!
Thank you, Dan. Your comment is excellent and informative. My reaction to reading the quote in the post “lost $120 million on Medicare patients last year” was “What the f*ck does that mean?” If you are at all familiar with accounting (not to mention the lack of transparency and the lack of market pricing in medical service provision), this $120 million “loss” could mean anything. It could mean the doctors, nurses, medical supply companies, drug companies, hospital construction personnel, and/or administrative staff shouldn’t have been paid so much last year.
The stakeholders in the sell-side of this business do not want anyone, including the federal government, to put any pressure on compensation, including compensation to doctors, nurses, patent holders, salesman, et al. It is not a crazy idea to investigate the possibility that the cure to “losing” money is cutting expenses. As Dan aptly points out, the providers are doing everything, including obfuscation, elimination of price-shopping, development of trade secrets, and absurd intellectual property protection, to prevent even the attempt of the obvious step of trying to contain the compensation for the sell-side.
Primary care should be paid clock time, just like you pay a lawyer.
Procedures (Tests, Labs, Surgery) should be paid Shop Rate
or Book rate.
that way the diagnosticians and PCP get their rewards spending time on patients, and proceduralists begin to specialize.
use the codes for looking at effectiveness, but pay to clock for PCP.
Dan,
Hhhm….there is probably a way to open source this…but you’d need to be awfully clever as to who set up the website. You’d need to have it be someone overseas who did not profit from the “infringement”, running the site on a cheap basis, with a webhost outside the US who could not be readily compelled to disgorge e-mail addresses of people who provided the info (how is Russia on this? They do a fair bit of IT outsourcing). Oh, or better yet, have a US fax address via an efax service, and have people fax the info from public places (Fedex Kinkos and the like). There would be some costs, but they could probably be kept down
This sort of thing isn’t my category, but I have no doubt some readers could quickly suggest how to do this. You’d also need someone overseas who was up for this mission, which would seem to be the sticking point in this equation.
I’d say that “communism,” not “socialism,” is destroying our health care.
The pentagon– for example, gives many employees more $170,000 a year; this means that those citizens can shop in stores that others can’t– hence my “communism label.”
So the problem is: “the economy is breaking down” as economic stratification becomes the motivation to “turn away the poor” since they’ll pay you nickels while a handful of “politburo members” can pay you millions.
DoctoRx writes above:
other rich countries seem to have more and better healthcare for all and yet spend much less as spend much less as a percent of gdp. why should america be so much different from the rest of the world?
all the evidence i have seen leads me to conclude it is just flat-out wrong to say we have spend even more. our weakly regulated multi payer non system of financing healthcare is horribly wasteful. fixing that, and getting the ama out of the cpt business (see dan duncan’s excellent comment above) may be a better alternative than throwing more money at the problem.
http://content.nejm.org/cgi/content/short/349/8/768
btw, i live in central MA, and there is a big problem, even with expensive private insurance, finding primary care docs here (many specialties too). even the doctors complain about it. it may be worse for people on medicare and something i haven’t seen mentioned is that for people on medicaid, which has even lower reimbursement rates, this can be a real impediment to getting healthcare at all.
the cms reports on both the senate and house bills do not reassure. here’s a bit from one of them:
http://www.cms.hhs.gov/ActuarialStudies/05_HealthCareReform.asp#TopOfPage
The Senate doesn’t consider that a problem because your mandatory health financing product is not designed to be used…
This is how rationing begins. No, no one in Congress wants to ration (hopefully), but this is always what happens when you let idiots try to design insurance. You can’t push down costs for one portion of the population without driving doctors away from it. It’s never worked any other way.
“it’s tough to make a decent living practicing within the regs.”
Yeah, right. Cry me a frigging river.
A propos of offshore servers for ticklish CPT info: It sounds like an attractive idea Yves, and Zero Hedge could help you with that part…
New Year’s greetings!!
There is a lot of great discussion on here about economics in general and I often learn a fair amount especially on topics (e.g., securitization) that I just haven’t dealt with much personally.
However, the posts/conversations on here regarding health care payment & funding are generally woefully lacking on insight.
Even this post misses the basic fact that one of the biggest proposed costs in the Senate or House health care bills right now is to completely back fill all of the ‘proposed’ cuts for Medicare physician payments (SGR formula which was put in place as a part of the BBA of ’97) and replace the SGR formula with a new formula linked to a new metric (e.g., medical inflation). This cost will be well over $100B and likely be one of the single biggest expenses in the bill.
Every major consistency in healthcare is getting bought off in this bill to some capacity and this is the pound of flesh being paid off to the AMA and other medical specialty societies so that they will endorse Obama’s legislation. Hell, physicians will actually make out quite well under the bill with no rate cuts. The only thing they didn’t get was a national hard cap on medical malpractice suits and there is a freeze on constructing new physician-owned ambulatory surgical centers and other free-standing ancillary services (e.g., imaging).
Whenever you hear providers lamenting all of the money they have lost from Medicare/Medicaid payments, you need to take it with a grain of salt. That $120M dollar figure is almost certainly a listed ‘charge’ for the service that Mayo generically lists. It is not the ‘cost.’ This practice in healthcare dates back to the early 70s when Nixon froze prices in healthcare including Medicare. It was the providers way of gaming the system to get around the price freeze controls and has existed ever since.
Easiest way to explain this is to just look at your next invoice from your physician. Their will be a ‘charge’ and a ‘cost’ that your insurer covers because this is the rate they have negotiated with whatever contracting vehicle the physician is a part of.
Finally, I get tired of hearing most physicians I deal with piss and moan about their ‘paltry’ incomes. PCPs (especially pediatricians) have a more legitimiate beef but by any rational comparisons (whether to physicians in any other country or almost any other ‘professional’ in the U.S) physicians’ annual salaries stack up very well. Of course when you try to point this out to a physician they will almost certainly make up some lame comparison about ‘Wall Street’ or financial types conveniently disregarding the fact that they have will lifelong employment with no period of underemployment or unemployment during their entire professional careers.
I greatly appreciate what physicians do & the complexities that they face. I just get tired (especially from an orthopedist who clears $290k a year) complain about their lack of income.
MG,
This post does not purport to be about the reform bill or Medicare in general. It makes a throwaway comment about it at the close, and your comments about the health care bill do not relate to that. Mayo is making a move now. The bill does not come into effect until 2013 or 2014. This may be political (Obama has praised Mayo as a model) or a mere happenstance of timing, but the post steered clear of that sort of discussion.
You may have legitimate issues about other posts, but the issues you bring up do not relate to this post, which has a very narrow focus.
And your point re negotiated rates does not apply to all health insurance. People who are in indemnity plans are not part of any PPO.
You missed the point of what Mayo is doing with this article and its link to healthcare reform bill. The Medicare Part B cuts to physicians were likely going to be addressed one way or the other in the next 12 months – no reform bill or reform bill. If Congress had continued to just backstop the cuts (as they have done for the past 3 years), it would have just made the scheduled 21.5% reduction larger and even more challenging to deal with in FY11 and beyond.
The issue is the sheer size of entirely filling the 21.5% reduction which is well over $100B. It has been a huge political hot potato. Its huge and there is no way the Republicans/Blue Dog Democrats would have come out and supported a move from Congress to entirely fill the 21.5% reduction and revised the SGR formula to index it to future healthcare inflation which generally has outpaced CPI inflation by 2x-3x the last 25 years.
One of the key points about the reform bills is that the proposed 21.5% cut will be filled almost immediately and not wait until 2013/2014. That is why the AMA and other physician specialty societies have come out and supported it even with the lack of tort reform.
Mayo was just taking a proactive defensive measure (it is only a 2-year trial program) in case the Medicare Part B cuts weren’t addressed more immediately or if healthcare reform died.
Almost all physicians accept Medicare patients (Medicare surveys annually to determine access) but a number of surveys from various groups (MGMA, AMA, etc) indicated that for the first time Medicare patients would have a potentially challenging time finding physicians who accept new patients with Medicare coverage as their primary insurance coverage. Doesn’t do you much good if you have coverage and can’t find a provider which is a real issue in many rural areas of the U.S. and if you have Medicaid coverage in certain states that pay so poorly that many specialists don’t accept it.
BTY – Pure indemnity plans have gone the way of the dodo. Almost none has them anymore (they represent about 2% of covered lives in the U.S. according to various reports. Even if you have an indemnity plan though, the physician that you see still had to be part of a contracting vehicle/network that agree to accept patients with that coverage.
MG,
You are incorrect here. I have an indemnity plan. I can see any doctor in the world, literally. I have seen doctors in London, Thailand, and in Australia and have been reimbursed. I get reimbursed for meds I buy in Australia.
I see any doctor I want to in the US. At worst, I pay and submit for reimbursement, which I strongly preferred doing anyhow when my plan ID was my Social Security number (they since fixed that). I did not like the idea of doctors who have no proper security protection having all the details needed for identity theft (who knows who might have or obtain access to their computers?). Since the vast majority of doctors accept credit cards, and I am usually paid within 45 days (provided I am on top of submitting claims) I usually have to front the cash only for 30ish days, which is a tradeoff I am delighted to make in return to the lack of restriction.
So I or the plan directly pays the full rack rate.
Here is a chart from the 2009 Kaiser Family Foundatino/Health Research & Education Trust:
Indemnity coverage (defined as Conventional in this slide)in the group market was less than 1% among firms surveyed that offer coverage
http://ehbs.kff.org/pdf/2009/7981.pdf
Other recent reliable figures (EBRI, etc) show that it is ~1% in the group market.
It is still a bit more common on the individual insurance market (which is where you likely got your coverage from) but even there is pretty rare (est., range from 5%-10%) but the individual insurance market is much smaller than the group market. It is only about 17 million covered lives in the U.S. right now.
Coverage for overseas treatment with most health insurance plans varies considerably too whether you have an indemnity plan or not. I would definitely recommend that anybody traveling overseas for a prolonged period check with their insurer to understand what is covered/what is not covered.
MG,
I did not get this plan on the individual market, so your assumption is incorrect.
I was raising the point re my international coverage not to make a statement about international coverage generally, but simply to disprove your assertion that any indemnity plan would be limited to a contracting doctor/network.
I must note in your arguments a tendency to make assertions that go beyond the facts at hand, so I find your criticism of my post (for simply presenting a story and making very limited observations about it) more than a bit ironic.
Then you are one of the rare people who has an indemnity plan through their employer. They have just become a rarity in the group insurance market.
Regarding CPT codes – these were created for the AMA by Harvard Univ as a method to standardized insurance claim filings – the old HCFA forms. The codes aren’t necessarily the problem. It’s how they are used by the big players, which include insurance companies and large hospital organizations.
After many years spent managing medical offices, it’s my opinion that we’d all be better off if most primary care service was strictly fee for service – NO insurance of any kind. Fifty percent of personnel expenses in medical offices are strictly for the management of insurance claims! That’s pretty sad. Couple that with all of the lost revenue (unreimbursed claims), it’s pretty sad state of affairs.
Also, something that keeps being missed in all of the health care hoopla is Medicare Part A -Cost reports. How hospitals are reimbursed for ALL services related to Medicare patients.
Say we have two hospitals, A & B. Their costs are the same, and they provide equivalent services to medicare patients. But depending on their Cost Reports (there are firms that specialize in “maximizing” cost report reimbursement), one hospital may be reimburesed 50% of their costs and the second hospital 85%. It’s a huge scam that’s going on – the senator for Tennasee, who’s family owns one of the largest private hospital systems, they got caught padding cost reports. It’s interesting how the press & the politicians keep all of the attention on doctor reimbursements.
Isn’t it sad that we now have two generations of people who have been taught to believe that you must see a MD for everything. And that only by seeing a doctor regularly, will you live a long and healthy life. Yet the irony is that most people who see doctors are diagnosed with something (that was started because insurance didn’t pay for well visits – so patients were diagnosed with something). As they medical community keeps lowering the “standards” for diagnosing for many “conditions”, it won’t be long that you will be diagnosed as ill for just breathing.
When will people wake up and realized that 150 years ago most people never saw a doctor and many lived to be 60, 70 or 80 years old. Unfortunately, we only hear about the “average” age, which totally distorts the fact that many, many people lived long healthy lives without any medical intervention. The average age is distorted by the high number of deaths of children.
The problem with healthcare payments is that their is no ‘perfect’ system. Pure FFS is a disaster from a cost control perspective because healthcare is unlike any other industry in that capacity is almost never underused. If a hospital bills beds, it will fill them. If a doc buys a piece of imaging equipment, he will use it. It results in overutilization, poor cost control, and weak incentives to coordinate care. Pure FFS and the explosive medical costs that come with it are the large reason why Congress enacted DRGs in ’83 for Medicare Part A (inpatient) and enacted the RBVBS for Medicare Part B )oupatient) in ’89. Needed to put a break on medical inflation and it had missed results.
Other extreme from Pure FFS is to put docs on 100% salary. This does help to control costs and really limits providers’ incomes. It is why most physicians hate it and won’t practice under such a reimbursement scheme. Additionally, productivity really falls under docs who are paid at 100% salary. The literature at this point is pretty conclusive and 100% salary docs see some pretty significant falls in the amount of patients they will see daily, the number of surgeries they will perform, and number of imaging exams they will exam.
There are a number of demo programs and attempts out there right now to restructure payments so that patient & provider incentives are better-aligned and that there is better cost-control and coordination. Medicare has a number of demos right now around this topic and the private sector (Promethesus project) has also been tinkering with this topic for the very few years. It is just really challenging to come up with a payment system that coordinates an episode of care across the various providers and adequately reimburses them for their time & services. No silver bullet here.
Regarding homogeneous populations, many European nations with universal healthcare have similar immigrant populations to the US. For example, 10.1% of the population of the Netherlands is foreign-born, *18%* of Sweden’s population is foreign-born, while 11.7% of the U.S. population is foreign-born. Yet Sweden and the Netherlands both have universal health care. But, you say, that doesn’t account for the multi-ethnic nature of the remainder of the population? See Belgium and Switzerland, multi-ethnic nations where the majority of people don’t even speak the same home language as the rest of the nation (Belgium’s divided between Dutch, French, and German, Switzerland’s German, French, Italian, and Romansh). They have universal healthcare too.
Regarding the Mayo Clinic, the Medicare laws are explicitly set up to prevent cherry-picking (i.e., accepting Medicare only for “cheap” patients where it is profitable while requiring “expensive” patients to provide private insurance or cash). Thus why they had to cease accepting Medicare altogether at that particular clinic rather than just kicking out the most expensive patients, they determined that this clinic had more expensive Medicare patients than others, and boom. Note that Mayo Clinic doctors (and Kaiser-Permanente doctors) are salaried, BTW. Just a data point there that might interest you.
The reason why FFS doesn’t work (except for primary care physicians) is simple: Specialists literally say, “your money or your life.” Your life is literally priceless — you can’t buy another one if you’re dead. So if you have a life-threatening condition that requires a specialist, you have no (zero) bargaining power — you either pay what the specialist demands, or you die. It’s no more amenable to free market cost containment than being mugged in Central Park is. Specialists have no (zero) incentive to contain costs because if they buy that new piece of diagnostic equipment to replicate what their competitor across the street has, they know they can just raise the amount of money they demand with “your money or your life” to pay it off. For primary care physicians it doesn’t work that way — if they make the price of a physical too expensive, for example, you simply won’t get a physical, you won’t die. That’s why PCP’s get paid so much less than specialists… it’s all about bargaining power, and “your money or your life” is the ultimate in bargaining power, and one that PCP’s don’t have.
We know what to do in response to “your money or your life” — bring in government to get the situation under control. In some situations government *is* the solution, not the problem. But getting ideologues to admit that is like convincing a Communist that capitalism is the best way to insure the best life for the most people… they simply refuse to admit any realities that contradict their ideology. It is to laugh…
As for blaming private insurers for the costs escalation: Private insurance pays only for 35% of medical care in the USA today, and 90% of the money paid in premiums goes out to pay claims, meaning if they made $0 profit and had $0 overhead you’d save only 3.5% of healthcare costs. Sorry, that pig don’t fly. There are clear things that need to be done to make the claims process consistent and give the insurers more ability to collude to set reimbursement rates (right now anti-trust laws prevent insurers from getting together to set a common reimbursement rate a’la’ Medicare, which limits their power to control costs), but you can’t claim they’re the problem with high costs. Providers are the problem, not insurers. ‘Nuff said on that.
Badtux,
Not sure your argument re insurers and cost escalation holds up. The impact of insurers on medical cost extends far beyond their profits.
The US has the highest administrative costs relative to total health care costs of any advanced economy. As I recollect, ours are in the double digits v (and I don’t mean 10.5%, somewhere north of 12%) versus single digits for all other advanced economies. And Medicare and the VA health care systems (and I believe Medicaid too) have low admin costs, so you can’t blame them.
Now it would be difficult to develop accurate stats on how much time doctors spend on admin, but the reports are widespread that a great deal of doctor time (doctor time, not staff time) goes into fighting with insurers to get paid. That is over and above insurer profits. Basically, doctors price their services over time to recoup the cost of their staff and personal time involved in claims administration. They have to, just as a lawyer sets his fees to cover his overhead and admin costs.
I need food to live, without it I will die. However, I have bargaining power because there are many different providers of food that can meet that need. Similarly, while I may need heart surgery, there are many doctors which can provide heart surgery. They bid against each other for my business in the form of lower prices much like grocery stores try to have cheaper oranges then the other guy.
There is plenty of blame to go around for the high cost of health care; be it the doctors, the hospitals insurance companies, malpractice litigation, or pharma. The fact is we as patients all exspect the latest and best care possible. Whether it is advanced diagnostics, or therapeutics. We all want to live longer and live well. Health care for all is a political decision not a monetary one; i.e. we can print plenty of money for useless wars and bailouts. Unless we elect politicians who really represent the people, we are stuck with a government run by corporate interests.
All this talk and yet no one seemed to notice that in general the Mayo Clinic at most of its sites never participated in Medicare to begin with! So what’s the big news then.
From the Mayo Clinic site
http://www.mayoclinic.org/billing-rst/faqs2.html
“Mayo Clinic is a non-participating provider in the Medicare Program. We do not accept assignment on claims submitted to Part B Medicare except:
•where the law requires us to;
•in the case of documented financial hardship;
•when the supplemental insurance is a contract payer;
•when the patient resides in the state of Minnesota.
When claims are sent to Medicare on a non-assigned basis, the benefits for the services are sent directly to the patient. Mayo Clinic is entitled to bill the patient for the difference between our billed amount and Medicare’s approved amount. We do not have to accept Medicare’s approved amount as payment in full. Mayo Clinic limits its charges according to the limits set forth by HCFA for the Medicare program. Mayo hospital claims are sent assigned.”