Monday, July 22, 2013

Fwd: qotd: Kuttner on Medicare shifting costs to patients

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Subject: qotd: Kuttner on Medicare shifting costs to patients
Date: Mon, 22 Jul 2013 08:13:37 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

The Boston Globe
July 18, 2013
Medicare 'cost-savings' rules pushing costs onto patients
By Robert Kuttner

The cost of Medicare, the top driver of runaway entitlement outlays,
seems to be stabilizing at last. For the past three years, Medicare
inflation has moderated to an annual average of 3.9 percent. But if you
look more deeply, a lot of these supposed savings are actually a shift
in costs to patients. As Congress and the administration devise new ways
to restrain Medicare, this disguised form of rationing is likely to worsen.

In order to cut costs — actually shift them, partly to hospitals and
partly to patients — Medicare applies extreme financial pressure on
hospitals to book admissions as outpatients whenever possible. This
shifts them from Medicare Part A (the hospital program) to Medicare Part
B, which is designed to cover only doctor bills. The hospital gets paid
a lot less and the patient gets stuck for a lot more.

Medicare does this through outside, for-profit vendors known as
"recovery audit contractors," who are paid based on how much they save
Medicare. They achieve savings by punishing hospitals after the fact if
a patient who might have been booked as an outpatient is classified by
the admitting doctor as an inpatient. The contractor only gets paid when
it overturns a medical decision — which sure seems like a gross conflict
of interest. The hospital not only doesn't paid at the inpatient rate,
it doesn't get reimbursed at all.

The big players in the system — hospitals, doctors, insurers — spend a
small fortune working to game it, while patients remain in the dark.
Thirty years of cost containment efforts using market incentives,
beginning with the creation of health maintenance organizations in the
Nixon era, have not altered the fundamental inefficiencies in the
system. The more complications the forces of cost containment add, the
more money the big players spend working the rules.

The latest fad in the ideology of using commercial incentives and
intermediaries to contain costs goes under the name of consumer-directed
care. The idea is to combine tax-favored "health savings accounts" with
high-deductible health insurance plans and to rely on the consumer's
capacity to shop around for the most suitable plan. But as the system
becomes ever-more convoluted, the idea of consumers having the knowledge
or market power to intelligently navigate it is laughable.

Medicare has been one of the crown jewels of American social policy.
Historically, it has been far more cost effective than the commercial
parts of the system because it has far fewer middlemen. Today, however,
instead of being a model of a comprehensive national system that
provides Medicare for all, Medicare is at risk of being pushed into the
commercialized model that has made the rest of America's health system
such a costly and inefficient mess.

The risk is that as Congress seeks Medicare savings, it will require the
Centers for Medicare and Medicaid Services to come up with more such
self-defeating cost-containment tricks. Gimmicks that take money out of
Medicare are the wrong means to address the federal deficit. The reform
of Medicare is properly part of the larger project of getting a
comprehensive and universal health coverage system.

If you have time, you should read the full article:

Comment: A prevailing meme is that patients are going to have to bear
more of the costs of health care if we ever expect to bring costs under
control. Although there are far more equitable and effective methods of
controlling costs, this dangerous concept of the need of the patient to
become financially engaged is now pervasive.

The private insurance industry has been quite innovative in developing
both direct and indirect methods of shifting more health care costs to
patients, thereby slowing the increases in premiums, which in turn keeps
their insurance products more competitive. This places the health and
the finances of patients at risk.

Employers are now adopting changes to their benefit programs with the
same goal of shifting more costs to patients. Employers, of course, are
interested in controlling the costs of their health benefit programs.
This also places the health and the finances of patients at risk.

What is revolting is that this alarming trend has now extended to
Medicare, presumably with the intent of shifting costs from the
government to the patients. This too places the health and finances of
patients at risk. This is totally unnecessary since the government has
the power to pay the right amount for the right care - a power that
insurers, employers and individual patients do not have.

Is health policy in the United States to be driven by a highly flawed
meme?A meme that harms patients' health and finances? As Robert Kuttner
says, "the reform of Medicare is properly part of the larger project of
getting a comprehensive and universal health coverage system." Patients
should really care about this. Your health should not depend on how much
green stuff you have in your pockets.

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