Tag Archives: Medicaid

The Wide Disparity of Pricing for Healthcare Services is Just a Taste of the Problems Yet to Come

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This past week, ABC News reported on the practice of the Northside Hospital System in Atlanta of charging outrageous prices for their services. They cited the bill of one patient where they did a line by line analysis of charges. What they found were many examples of line items for which the patient was charged exorbitant prices for things that the hospital could purchase through its suppliers for a tiny fraction of the cost. One of the most glaring examples was a pill for which the patient was charged several hundred dollars in spite of the fact that the hospital could purchase it for less than a nickel.

Hospitals across the country engage in such pricing strategies, to one degree or another, in order to make up for losses as a result of low reimbursement rates by health insurance, managed care companies, Medicare, and Medicaid and also as the result of the cost of doing business in a dysfunctional system.

This practice is considered a strategy of necessity by providers of many healthcare services simply because that is the way the fee-for-service, zero-sum billing game has evolved. Payers establish reimbursement rates that enable them to stay in business, which means making a profit. And, do not be confused by hospitals that claim to be not-for-profit for even these providers must be able make money if they want to stay in business. The only differences are the uses of the profits and the bank accounts into which the dollars must inevitably be deposited.

Every billable medical or hospital procedure results in high-stakes competition to determine where those dollars will end up. Health insurance, managed care companies and other payers set reimbursement rates and also make providers jump through hoops as part of the claims processing strategy to look for any reason to justify denial of the claim. This forces providers to develop coding and billing strategies to optimize their revenue generation and also requires them to file and refile claims. It is a zero-sum game in which there are winners and losers in the competition for each and every healthcare dollar, not counting the patients who almost always are losers in the billing game.

What charges are not reimbursed by the various third-party payers are then billed to patients. Some of the money is eventually collected and much of it must be written off. Families burdened by outrageous medical and hospital bills is the single greatest cause for most of our nation’s personal bankruptcies. The write-offs necessitate new and more innovative charging and billing strategies. It is a vicious circle that drives up the cost of care enormously. Although we have seen some improvement, in recent years, in the rate of increase of aggregate healthcare costs, for at least two full generation the rates of increase have been substantially higher than the Consumer Price Index (CPI). There have been many years when the rate of increase has been double- or triple the rate of the CPI. Higher costs require providers to increase prices, which requires insurers to increase premiums on a merry-go-round that is anything but merry to the patients.

When we think about the number of healthcare dollars that never end up in the hands of providers of actual medical, hospital, or ancillary care, it can be a staggering amount. The insurance, managed care, and government payers always underestimate the percentage of dollars that are allocated to the administration process relative to those spent on direct care to patients. That cost is not just the cost of doing business for the private and public payers (which for the private payers must include profits) it also includes every dollar spent by providers for the purpose of coding, billing, claims processing, and management of receivables.

It truly is an outrageous process but it is the inevitable companion to the practice of fee-for-service (FFS) medicine in a market driven by health insurers and other third-party payers and processors.

The process is so complex that, in spite of claims on the part of health insurance and managed companies to the contrary, there is no accountability. Incompetent and inefficient providers pay no penalty for their poor performance and both the best and the worst providers survive no matter what the level of patient satisfaction.

Free market forces, in the true sense of the concept simply do not function in healthcare.

The biggest problems in healthcare in America, whether speaking of quality, cost, or access are the inevitable outcomes of a system driven by health insurance, Managed, care and other third-party providers; both public or private.

That Obamacare or, more correctly, the Affordable Care Act, (or more appropriately the Affordable Health Insurance Act) commits us to a health-insurance driven market is a recipe for continuing and escalating disaster. The motivation of Obama and the members of congress who finally chose to act was admirable if misguided. We have tried to fix a system driven by forces that even our smartest people seem unable to comprehend with a solution that can only aggravate an already tragic reality.

It is, truly, a national embarrassment that so many citizens of what we consider to be the richest and most powerful nation in the history of the world must deal with illness and injury of themselves and their families without access to what we also describe as the highest quality healthcare on the planet.

What makes the situation most ludicrous is that it is our stubbornness and our prejudices that keep us from embracing a solution that will provide comprehensive healthcare and prescription drugs to every single American man, woman, and child, without relying on socialized medicine, at a cost that will save the American people trillions of dollars.

My book, Radical Surgery: Reconstructing the American Health Care System, lays out a healthcare plan that will give us everything we need, at a reasonable cost, without any of the things that the American people seem to fear, pathologically.

Don’t believe me? Check it out!

Are Free Market Forces Good for Healthcare?

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Contrary to popular belief, the problems with the American Health Care System are not the result of market forces run amok. In fact, just the opposite is true. The American health care system languishes because the forces of the free market are unable to exert their influence. Imagine, if you will, how our free market system would look if it functioned like our health care system.

Imagine that you are sitting at home, watching television, and something feels out of sync. You can’t put your finger on what it is you are feeling but it is nagging at you and keeping you out of sorts. After a few days, the problem seems to be worsening and you are really beginning to worry. Finally, you pick up the phone and place a call to your local retail professional and make an appointment.

On the appointed day you arrive at your local mall or shopping center and you describe your symptoms to your retail professional. Your retail professional listens intently, asks a few questions, and then diagnoses your problem and offers a treatment protocol to make you feel better. Your retail professional tells you that the problem is that your home entertainment system is not meeting your minimum daily requirements. As a solution, your retail professional tells you that what you need is a new home entertainment system with state-of-the-art technology.

Now, it just so happens that you retail professional has the perfect home entertainment system to sell to you and guess what? It’s covered by your retail insurance policy. In checking your benefits it turns out that you’ve already satisfied your deductible so your insurance is going to cover eighty percent of the total cost of your new system.

What your retail professional may not explain to you is that your home entertainment system exceeds the usual and customary charges for such items so the insurance is not going cover your retail professional’s full cost. She’s not worried, however, because there are a number of accessories she can sell to you that are covered and these will more than make up for the difference.

I know this sounds a little silly, but think about how our free market economy would work if the merchants with whom we do business would decide for us what we need and how much we are going to pay, and that we would be happy to accept their decisions without question because our insurance is going to pay for the merchandise, anyway. This is exactly how the healthcare system works today and we wonder why costs continue to rise at or above the rate of the Consumer Price Index.
The problem with the American health care system is not that doctors make too much money, the problem is that the incentives in healtcare reward the wrong behavior. The problem is not that health insurance companies, managed care, Medicare or Medicaid absorb huge chunks of our health care dollar, the problem is that these entities exist at all.

Think about it for a moment. If we really want to provide universal health care what value do health insurance, managed care, Medicare and Medicaid contribute? Don’t these entities exist to restrict access to care to only those who are eligible for coverage? Don’t these entities exist to limit care to only those services that are covered by our schedule of benefits and for which we have paid?

If we want to provide comprehensive health care to all Americans we have to change the way we think about our health care system. There is a solution but it resides outside the boundaries of conventional thinking.

Visit my website atwww.melhawkinsandassociates.com and check out my book, Radical Surgery: Reconstructing the American Health Care System. In fact, tell all of your friends about it.

ObamaCare Approval Rating Continues to Fall

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Over the last few months there have seen and heard numerous reports that the public’s approval rating for ObamaCare, more appropriately referred to as the Affordable Care Act, has been falling steadily and now rests well below forty percent.

This should come as no surprise. Attempting to fix the American healthcare system by relying on the health insurance industry is like trying to fix Congress by making it easier for people to get re-elected.

The best we can say about the Affordable Care Act is that it was a nice try but one that was doomed to fail because its design was driven more by political considerations than by an understanding of how the healthcare system actually works. All ObamaCare really accomplished was to add another layer of complexity to a system that was already unimaginably complicated.

Until we are ready to acknowledge that health insurance is one of the biggest reasons why our healthcare system fails and, of course, that human beings actually deserve medical care when they are ill or injured, our tinkering with the healthcare system will only make it worse.
Focus on health insurance, if you will. Imagine for just a moment that we all could agree that there ought to be a way to see that all men, women, and children have access to health care when they need it.

Now, think about what health insurance actually does. The health insurance industry restricts access to care to only those people who are covered by a health insurance policy and it limits care to only those services that are specifically covered by that policy.
Assuming, again, that we want everyone to have access to healthcare, why would we be willing to pay the health insurance industry hundreds of billions of dollars to restrict care to a special few individuals and to limit care to only services that have been specifically identified?

And, yes, I’ve heard the argument that we over-estimate the amount of money siphoned off by the health insurance industry. Just the opposite is true. We grossly underestimate the degree to which the health insurance industry contributes to the rising cost of healthcare. The cost of health insurance is not just the result of that portion of our premium dollars that are retained by the health insurance industry after payment of claims to providers.

The cost of health insurance also includes every dollar that is spent by doctors, hospitals, nursing homes, out-patient surgery centers, rehab facilities, lab and imaging centers, home health care providers, and hospice providers to manage the process of filing insurance claims and fighting to get the paid what they are rightly owed.

We could also add the expenditures by employers as they manage the process of selecting health insurance or managed care providers, managing the enrollment process, and mediating grievances when their employees are unfairly reimbursed for care.

And, we could factor in how much the health insurance industry pays to influence legislators. And then, of course, there is Medicare and Medicaid.

If we could recoup every healthcare dollar expended by people like you and me, and also by our employers, that does not end up in the hands of actual providers of care we could afford to provide comprehensive healthcare and prescription drugs to every American man, woman, and child.

And, if you want “to hear the rest of the story,” as Paul Harvey used to say, take a look at my book, Radical Surgery: Reconstructing the American Health Care System Continue reading →

Disenfranchisement and Hopelessness

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What does it mean to be disenfranchised? What does disenfranchisement have to do with Hopelessness?

The most common use of the term disenfranchised has been associated with the right to vote. People who are disenfranchised are not permitted to participate in their own governance. More generally, it could refer to the loss or denial of any of the civil liberties to which a free people are entitled, under the law. Typically, when we say that someone is disenfranchised we are talking about people from whom something has been taken away.

We have chosen to expand the term to include people who have essentially disenfranchised themselves. These are individuals who no longer believe that what they do, think, or say matters to their community, their nation, or society. In this case, disenfranchisement is a voluntary abdication of one’s responsibility to participate in one’s own governance. This type of disenfranchisement flows from hopelessness.

Human beings experience hopelessness when they no longer believe they have control over their own destiny or over the outcomes in their lives. Literally tens of millions of people, in this great nation of ours, have lost hope. They no longer believe that the American people, as a whole, care about them. They no longer believe that anyone is interested in listening to their complaints of woe let alone take action to address those complaints. They no longer believe in the “American Dream.”

It is easy for the rest of us to shout out in pious righteousness that these people need to do something for themselves but, literally, these people do not see anything they can do. That’s what it means to be powerless. Hopelessness and powerlessness are so closely intertwined that it is almost impossible to distinguish one from the other.

We tell them to get a job, but there are no jobs for them that will enable them to support their families. They can work somewhere for minimum wage but no employer is going to give them a sufficient number of hours per week that would obligate the employer to offer benefits. They can make a better living on Welfare. The argument that Welfare offers no advancement opportunities is meaningless to people who cannot envision something better. We must be able to envision if we are to believe.

When faced with serious injury or illness of a family member, the disenfranchised know that the American people are prepared to let them suffer. They know that every other developed nation in the world, apart from “the land of the free and the brave,” has addressed this issue of access to healthcare. Americans, however, steadfastly refuse to provide healthcare to all Americans. Even when the President of the United States has pushed through healthcare reform legislation in the form of the Patient Protection and Affordable Care Act (PPACA), however imperfect, the opposition attacks it relentlessly. The message that the disenfranchised hear, loudly and clearly, is that the majority of Americans “do not want us to have quality medical care for our families nor are they willing to pay for that care.”

Mainstream Americans are frustrated that so many people have become dependent on the government for welfare, food stamps, and Medicaid. We cry out, “What more do you want?” We do not understand why these people express resentment rather than gratitude.

When, in the face of our staggering national debt, all the disenfranchised hear from those in power are proposals to cut food stamps, welfare benefits, or other entitlement programs; why would they feel anything other than resentment?

What Americans need to wake up to is the idea that this reality with which we are confronted is a consequence of decisions we have made over the last seventy years. We created this monster called welfare. It was intended to make sure that poor mothers could care for their children but the reality is that it succeeded only in trapping huge populations of Americans in a reality that is little more than second-class citizenship.

It used to be that even the poorest of the poor would see an education as a ticket out of poverty and as a stepping stone to the American Dream. In most urban communities, the disenfranchised no longer believe in education as a ticket to anywhere other than free day care. What they know is that huge percentages of their children are failing in a school system that is also second class. When we offer voucher programs to help families put their children in better schools we are sending a subtle but powerful message that America has given up on urban public schools.

The fact is that the only parents that take advantage of vouchers are people who still cling to hope and some vestige of the American Dream. The other significant fact is that unless the parents who opt to take advantage of vouchers are also willing to accept responsibility as partners in the education of their children and ferociously encourage their sons and daughters to work hard at school these kids will be no more successful in their new schools than they were in their old ones. Many “charter schools” and other schools that admit “voucher children” to their classrooms are finding this out as they see their school’s declining scores on state competency exams.

So, let’s think about this for a moment. We have an expanding population of poor Americans who:
• Are third- or fourth-generation beneficiaries of welfare
• Cannot gain access to anything more than the minimal level of healthcare for their children and little or no healthcare for themselves,
• Who cannot find jobs that pay better than minimum wage and that offers enough hours to qualify for benefits,
• Who see their children fall so far behind in school that “failure” seems inevitable, and
• Who hear elected officials and policy makers demand that we cut entitlement programs rather than increase taxes paid by the wealthy and the middle class.

Why in the world would we expect these men and women to believe in an American Dream that is nothing more than an illusion for them and an empty promise for their children?

Welfare and other programs that teach people to be dependent rather than independent and interdependent are a cancer that is eating away the heart and soul of our nation.

We must acknowledge, as we move further into the Twenty-first Century, that the policies that got us into this mess are incapable of getting us out. We desperately need new ideas and new solutions. We need to think exponentially and challenge all of our assumptions about the way our society provides for the poor, takes care of the sick, and educates our children.

How much longer can we expect working men and women of our nation to continue to carry the burden of a burgeoning population of poor and disenfranchised people on one end of the productivity continuum, and population of retirees that is growing at an unprecedented rate on the other? What happens to our status as the leader of the free world when our economy buckles under the oppressive weight of the retired and the dispossessed?

In a few weeks, I will be introducing my latest book entitled, Re-inventing Education, Hope, and the American Dream: The Challenge of the Twenty-First Century. It is a book that offers a strategic action plan to address major components of the dilemma in which we find ourselves. In this book, I suggest that our systems of education, both public and private, offer the best hope for attacking the problems we face as a society and for bringing the disenfranchised back into a game in which their contributions are desperately needed.

My book Radical Surgery: Reconstructing the American Health Care System, published in 2002, already offers a solution for providing universal healthcare and prescription drugs at a price that we can afford; and, in a way that relies on free market forces, not government, to drive quality, cost, and accountability.

Many people have branded Radical Surgery, sight unseen, as just another proposal for socialized medicine. If they would set aside their prejudices and open the book they would learn that Radical Surgery rejects socialized medicine and offers another alternative. It is an alternative, however, that requires that we open our minds to a whole new way of thinking about healthcare.

Implementation of the very specific strategies offered in these two books, Re-Inventing Education, Hope, and the American Dream and Radical Surgery, will provide a realistic opportunity to re-engage the disengaged members of our community. The consequence of seeing this population continue to grow will be nothing short of apocalyptic, which is what my novel, Light and Transient Causes, has been written to illustrate.