"The bottom line: Under Medicare’s bizarre rules, hospital doctors are paid as much as three times more for patient care than those in private practice."
And absolutely nowhere in the article does it talk about how the cost of preventing fraud by single practitioners is the similar to the cost of investigating a single hospital. [1]
Trying to administer a national system to individual providers leaves gaping holes which crooks drive dump trucks through to load up on 'free' taxpayer dollars. So fix that problem and payments can get normalized.
The actual bottom line is that Medicare doesn't make "bizarre" rules, they make rules to try to minimize fraud and maximize patient benefit, if a rule seems "bizarre" you need to then go back and figure out what the motivations for that rule are.
"In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, "I don't see the use of this; let us clear it away." To which the more intelligent type of reformer will do well to answer: "If you don't see the use of it, I certainly won't let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it."
This paradox rests on the most elementary common sense. The gate or fence did not grow there. It was not set up by somnambulists who built it in their sleep. It is highly improbable that it was put there by escaped lunatics who were for some reason loose in the street. Some person had some reason for thinking it would be a good thing for somebody. And until we know what the reason was, we really cannot judge whether the reason was reasonable. It is extremely probable that we have overlooked some whole aspect of the question, if something set up by human beings like ourselves seems to be entirely meaningless and mysterious. There are reformers who get over this difficulty by assuming that all their fathers were fools; but if that be so, we can only say that folly appears to be a hereditary disease. But the truth is that nobody has any business to destroy a social institution until he has really seen it as an historical institution. If he knows how it arose, and what purposes it was supposed to serve, he may really be able to say that they were bad purposes, that they have since become bad purposes, or that they are purposes which are no longer served. But if he simply stares at the thing as a senseless monstrosity that has somehow sprung up in his path, it is he and not the traditionalist who is suffering from an illusion."
Excellent quote. This idea can be applied almost everywhere, and I wish people would do it more. It's easy to simply declare that some feature is a result of blind stupidity, but rarely correct.
The actual bottom line is that Medicare doesn't make "bizarre" rules, they make rules to try to minimize fraud and maximize patient benefit
My inclination is to believe that anything that comes out of government, including Medicare, is going to have a lot of bizarre rules whose actual purpose is to make a lobbyist happy.
Well in the US it seems like they do. Rates and rules are changed to achieve a certain revenue level, and there is pro-forma evidence that this is means taxing those least able to construct plausible evasions. Its only after that tap starts drying up that the more 'complicated' targets are gone after.
Watching the UK Parliment tear into the tech guys for using legal ways to avoid paying taxes in the UK is an example of legislative bodies turning their sights from the 'easier' (but now nearly tapped out) tax payers to the less easy ones.
> And absolutely nowhere in the article does it talk about how the cost of preventing fraud by single practitioners is the similar to the cost of investigating a single hospital.
This is not even remotely plausible. Forensic accounting and investigation has a cost roughly proportional to the number of transactions. Transactions do not become magically cheaper to investigate merely by conducting them on the same real estate.
There have been a number of stories on this and ABC news did a pretty good 20/20 segment on it as well. The math works sort of like this, one investigator's salary is $S, and one investigator can handle one transaction 'stream' in real time. We'll call $D the number of transactions a doctor is approving, and 'N' the number of doctors making transactions.
Hospitals tend toward either 'having fraud' or 'not having fraud' so the one investigator ($S) covering a hospital can decrease the at risk transactions by Nh*$D where 'n' is the number of Doctors at the hospital.
To investigate a private practice you have a small number of doctors "Ns" and busting them recovers a much smaller 'transactions per investigator' value. So an investigator looking into one doctor doesn't have an impact on the other doctors that have private practice in the same building.
As the cost of investigation is part of the budget (as are the payouts) you can afford to give more of the budget payout to Hospitals because your your per doctor investigator cost is lower. (zero sum game here).
Lack of tort reform, "defensive medicine" and the inevitability of being forced to work for a medium+ sized group or hospital have made the career increasingly unattractive. Something is amiss when 9 out of 10 physicians would discourage children from going into the field.[0]
What the flying fuck holy shit. 5,105 doctors responded and 1/10 recommends their profession?!?!?!?!
The worst part is that some of my friends are doctors and are the nicest people who really care about helping and healing others, and I know will never ever strike since that would hurt their patients :(.
Could this be by design? A private practice seems like a waste of resources. Imagine the unused medical devices or the large number of support staff around just one or two doctors.
`These trends will ensure that the consolidation of doctors into larger groups will continue. Whether this definitively benefits patient care is still unclear, but I suspect that patient outcomes will likely improve as this movement continues.`
But why pay the doctor less than the hospital for the same treatment? The doctors can figure out themselves whether it makes more sense from a cost perspective to join a hospital, a clinic, or to remain independent.
Perhaps, but why is there an attitude that doctors are evil and that all of them are so well off that we shouldn't care what happens? Seems to me that's the prevailing attitude. They're continually getting pinched: Tens of thousands for malpractice insurance. Hundreds of thousands in debt just to get to the point where they can practice. Seems reasonable if you have a good upside, but that upside keeps getting pressed on. I don't see how that can continue without serious reform in the other direction (tort limits and forgiveness of student debt for medical school)
> They're continually getting pinched: Tens of thousands for malpractice insurance.
Incidentally, the hospitals' liability cap is several orders of magnitude lower than doctors' in many cases (tens of thousands vs. millions). This makes no sense when you take into account the fact that the hospitals, not the doctors, are often the ones setting policies as to which procedures will or won't be done in response to a different result on a test, etc.
So, the hospitals get to set policies to keep their costs low, shielded by the benefit of a ridiculously low (corporate) liability cap, shifting the liability instead to the doctors who will be performing the operations, at significant (personal) liability and for a significantly lower payment than what the hospitals receive.
I think its rather lucrative and a secure way to make big bucks. If you can memorize and work hard you can succeed. In many fields you need talent, especially to reach the 200k level.
By that reasoning, we should work to close small independent stores because it's more efficient to deliver and retrieve products to one central location like Walmart.
I think what you're arguing is a form of premature optimisation. High utilisation of the equipment is a low priority, and not a matter of public policy.
Consider the possibilities that the payment structure hampers. Could the doctor instead go into partnership with other doctors? Or rent space in a complex that has lots of specialists in it giving some kind of equipment pool? Or contract out scans to a nearby hospital? Or have a nearby hospital refer some matters to the doctor? Equipment could be rented per day. Or maybe fancy equipment isn't justified, and unit cost is lower.
Having government anoint winners and losers streamlines industries away from innovation. It reduces price competition, delivers reduced patient choice, and creates environments more friendly to rent-seeking behaviour.
> A private practice seems like a waste of resources. Imagine the unused medical devices or the large number of support staff around just one or two doctors.
Nope. Cardiologists maintain waiting lists weeks in advance to keep equipment utilization a close to 100% as practical. The large number of support staff are used to keep a pipeline of patients on standby so that when equipment becomes idle the next patient is standing there ready to begin. The patient experience is a lot like a car zipping through a Toyota factory. The steady stream of test results keeps the cardiologist busy analyzing and dictating results.
Moving this to a hospital gains very little efficiency. What it does is pay for hospital lobbyists.
“I miss being in private practice and being my own boss,” says Alexander, the Illinois cardiologist. “I would have said 30 years ago that I planned on dying with my boots on and practicing until I couldn’t practice anymore. Now, do I look forward to retirement? Yes.”
This will be the single greatest cause behind the looming physician shortage and subsequent decline in standard of care. How much harder do you work, for yourself, in a startup - versus for someone else, as an employee? It's NO DIFFERENT for doctors.
Most people aren't really natural entrepreneurs or businessmen, and do best when they're employed by someone else (which is why most people work for other people rather than owning their own businesses). I don't see why doctors would be any different in this respect, as there's no reason to think that medical ability and entrepreneurial ability are correlated.
The same is true of programmers, of course. Although it can be hard to remember when reading startup-soaked HN stories, most programmers are happily employed by other people and aren't off founding startups.
If practicing is his love, then why doesn't he go back into private practice instead of retiring and take 'love of the job' as partial payment? It's not like he wouldn't be able to live very comfortably on the proceeds of his life's work to date, something that a great deal of other 'love of the job' workers couldn't do.
> It's not like he wouldn't be able to live very comfortably on the proceeds of his life's work to date
That's quite an assumption you're making there. Aside from the fact that most doctors are not wealthy beyond belief (contrary to popular opinion), the insurance structure has changed so much in recent years that many literally cannot work any longer.
Medicare reimbursements, for example, have been cut so much that doctors operate at a loss for certain procedures - for specialists, this may even cover the bulk of what you do, so the choice is whether to spend your savings to pay for your "hobby" or to retire.
"Aside from the fact that most doctors are not wealthy beyond belief (contrary to popular opinion)".
Certainly true.
Cardiologists, on the other hand?
Median salary: $362,000 (with 10th% at $247,000, 90th% at $502,000).
In terms of procedure costs, Medicare pays a hospital nearly $40 for an ECG (and if you're paying privately, you'll be paying a lot more) - for a procedure that takes an assistant an average of 60-90 seconds to apply 10 pads, acquire a 10-15 second graph of heart activity, and interpret (though any ECG machine in the last decade does rhythm analysis of its own accord). In the field, paramedics routinely run the ECG process in 3-5 minutes.
Since 2007, when the government began repeatedly cutting Medicare payments to doctors, the number of cardiologists working for U.S. hospitals has more than tripled, while the number in private practice has fallen 23 percent, according to the ACC. Jay Alexander, a cardiologist who co-owned a practice in Lake County, Ill., says he sold out to a local hospital after his Medicare revenue dropped 35 percent. Now the government pays Alexander three times as much to perform the same tests and procedures—far more than he would have needed to keep his private practice open. “If this was government’s solution to reducing health-care costs, they should have their heads examined,” he says. “This is an unfortunate consequence of bad planning.”
The "high price," I suppose, is the reduction in private practice physicians. Since the article provides no evidence that private practice is superior (for society) to hospital practice, I'm left unable to assess whether this is in fact a "high price" at all.
Presumably this is not accidental but is instead a manifestation of an intentional policy. The details of this policy are left unaddressed by the article, as are its pros and cons.
The article is pretty clear that the "high price" is that the same procedure performed by the same doctor is often billed at a much higher rate when the doctor is an employee of a hospital instead of a self-employed physician.
No. It seems that hospitals are paid on a per-patient basis while individual doctors are paid on a per-procedure basis. Unless I misunderstood the article.
The article is pretty clear about what the author considers to be the price: doctors are less able to give personal treatment and more likely to burn out and want to retire as early as they can. (Whether you agree is another question, but the article does provide this evidence.)
For what it's worth, most of the physicians I know presume that this was set up expressly to incentivize physicians to become hospital employess. The thought is that when the time comes to ratchet down reimbursements, the hospitals have no choice, while independent physicians vote with their feet by choosing not to participate. There are already a few internists I know who will not take new Medicare patients, even though that's not supposed to be charity reimbursement.
The article is quite incomplete. The highest price is the opportunity cost of doctors going into billing instead of doing clinical work - especially for hospitals
I can say first hand that there is an extremely lucrative business-opportunity for physicians to go full time in billing - using domain knowledge and a careful study of the billing schemes to increase financial returns.
For exemple, what if you could identify the patient cases where manual recoding has the highest probable financial return, and compare individual returns to the cost of the human resources you have at hand (from medical coders to physicians) - to assign the best human resource to each case?
In a highly complex case, recoding by a physician who perfectly knows the coding and billing rules can easily double the value billed.
So for a >200k case, it can be worth having a physician spend 20 minutes carefully studying every aspect of the file, aided by specific software modelling the possible billing scenarios.
If you add some programming knowledge and statistical knowledge, all this can be easily automatized, and make even more lucrative.
A full industry is created, based on exploiting the arcane artificial rules imposed on the system - just like for taxes.
The real problem here it that it takes doctors, for which the next best alternative use would have been doing clinical work on patients.
That is partially true, it doesn't have to be a physician, but it does have to be somebody with real knowledge and skill and not just a 3 Month course somewhere.
Someone I knew, would optimize the billing codes so that she could "write-off" non-covered items, and maximize patient care. Her salary was still quite low compared to other doctors in executive roles.
There is no reason that a licensed doctor is required to do what you describe. A software programmer with a one-year billing code training can do it. Doctors are rate limited by med schools, but that only applies to patient care, not support functions like billing.
There is no reason at all - no one is "requiring" doctors to do anything at all. However, the invisible hand of the market do provides incentives for doctors willing to do that job!
The reason is the difference in financial gain if for some reason (domain knowledge) a doctor can perform the same job more efficiently - which is usually the case in medical coding, where a doctor usually know better which complications are linked with which diseases, and which procedures must have been performed and thus, if they don't appear, have usually been done but for some reason the coding didn't happen.
That's just 2 quick examples - a physician can "dig" in the file for supporting evidence to back the claim. Some are quite good at it, and with the numbers at hand, tiny differences in productivity make huge financial gains.
Say that worker 1, anyone with good training, can make 2x returns, while worker 2, a doctor, can make 2.2x returns.
Depending on the volume, you hire both and give the common files to worker 1, and big profile cases to worker 2.
Each worker is usually paid at the marginal value of labor.
When the marginal value of billing improvements become greater than the marginal value of clinical care, labor do arbitrage and moves to the higher paying sector - in this case, doctors are going for clinical practice to billing.
Someone with basic training - or even algorithm - can be efficient, and provide a first line of coding. But domain knowledge still rules and brings in big bucks.
Trust me - my job is to bill patients/insurance as much as we are legally allowed to, using any mean necessary, in a way that will stand in court if challenged.
We're long past data-mining for potential missing codes - we now run simulations to isolate which coding is the most probable and the most lucrative, and divert the file to the right person according to the potential financial gains. Any loophole in the coding rules is exploited big time !
A quick example - several years ago there was no consequence if you "forgot" codes, however simulations figured out in 10% of the case this resulted in greater gains.
Consequently, after a matching legal advice, codes were forgotten 10% of the time - of course, the right times, until forgetting code was disincentivized thought legal changes.
Vigorous coding is just as legal as paying as little taxes as allowed by the tax code. People are paid to make sure everything done strictly follows the letter of the law, with every t crossed and every i dotted.
OTOH, fraud is easy to catch - if the case repartition suddenly changes, or of there are some mistakes, something must be happening.
But the present incentives are for making rock solid, court-proof claim cases.
It induces all kind of interesting changes- like making sure 5 different health professionals all considered the patient was in end-of-life to qualify for a more lucrative palliative care.
As long as there are the 5 signatures on the paper (and in a 2nd line of defence, proof they saw the patient - like signatures, agendas, etc) it's as good as printing money.
One would have to be really really dumb or overtly greedy to engage in fraud.
And absolutely nowhere in the article does it talk about how the cost of preventing fraud by single practitioners is the similar to the cost of investigating a single hospital. [1]
Trying to administer a national system to individual providers leaves gaping holes which crooks drive dump trucks through to load up on 'free' taxpayer dollars. So fix that problem and payments can get normalized.
The actual bottom line is that Medicare doesn't make "bizarre" rules, they make rules to try to minimize fraud and maximize patient benefit, if a rule seems "bizarre" you need to then go back and figure out what the motivations for that rule are.
[1] http://www.gao.gov/products/GAO-13-104