How the Status Quo Leaves Medicare Ripe for Abuse
Yesterday, the Washington Post ran its second major expose in as many months about abuses in the Medicare program. Last month’s article was about the way drug companies abused reimbursement for anti-anemia drugs; yesterday’s piece focused on providers “up-coding” – that is, claiming to see patients for longer and more intense visits, so as to claim higher reimbursement from Medicare. The article notes the practice has become widespread, and costs Medicare billions annually:
Thousands of doctors and other medical professionals have billed Medicare for increasingly complicated and costly treatments over the past decade, adding $11 billion or more to their fees — and signaling a possible rise in medical billing abuse, according to an investigation by the Center for Public Integrity.
Between 2001 and 2010, doctors increasingly moved to higher-paying codes for billing Medicare for office visits while cutting back on lower-paying ones, according to a year-long examination of about 362 million claims. In 2001, the two highest codes were listed on about 25 percent of the doctor-visit claims; in 2010, they were on 40 percent. Similarly, hospitals sharply stepped up the use of the highest codes for emergency room visits while cutting back on the lowest codes….
Medicare billing data do not indicate that patients are getting more infirm, as their reasons for visiting their doctors were essentially unchanged over time. And annual surveys by the federal Centers for Disease Control and Prevention have found little increase in the amount of time physicians spend with patients. That suggests that at least part of the shift to higher codes is due to “upcoding” — also known as “code creep” — a form of bill-padding in which doctors and others bill Medicare for more expensive services than were actually delivered, according to health experts and the data analysis by the center.
Because physicians and hospitals are paid by Medicare in a fee-for-service format according to the services they perform, many have discovered that they can get paid more by billing for more, and/or more intense, procedures and services. Ironically, the Post article notes that “the aggressive push to electronic medical records” – which Obama Administration officials claimed would lower health costs – “is likely fueling the trend toward higher codes” and greater Medicare spending.
What does Obamacare do to change fee-for-service medicine? The answer ranges from “precious little” to “not enough.” The law does include various demonstration programs designed to improve coordination of care, and shift emphasis back towards primary care physicians. But the non-partisan Congressional Budget Office, in a January report analyzing dozens of Medicare demonstration programs over decades, said these programs did not contain health costs – because of the flawed and perverse incentives included in fee-for-service medicine:
The evaluations show that most programs have not reduced Medicare spending….Demonstrations aimed at reducing spending and increasing quality of care face significant challenges in overcoming the incentives inherent in Medicare’s fee-for-service payment system, which rewards providers for delivering more care…
Ironically, Medicare premium support could encourage a movement away from fee-for-service medicine – by offering an avenue for providers and insurers to come up with new and innovative payment methods that focus on value and quality rather than performing services. But President Obama and liberal Democrats have decided to oppose these reforms – which means that, under President Obama, we’re likely to see even more stories about how Medicare providers are manipulating and abusing the reimbursement system to the tune of billions of dollars.