Hospital Industry Bristles at Cuts: After Proposing $313 Billion Health-Spending Reduction, Obama Mu

[lindisfarne]

Source: Wall Street Journal

Hospital Industry Bristles at Cuts: After Proposing $313 Billion Health-Spending Reduction, Obama Must Win Support

Hospitals and other medical-industry groups are pushing back against President Barack Obama's proposal to cut $313 billion in government health spending as the White House intensifies its effort to revamp the nation's health system.
...
Under pressure to amplify its payment plan, the White House on Saturday outlined $313 billion in additional spending cuts over that period to health-care providers paid through Medicare and Medicaid, the federal health programs for the elderly and poor. That would bring total cost savings and tax increases identified by the Obama administration to help pay for the overhaul to nearly $950 billion.
...
A spokeswoman for the White House Office of Health Reform said that as more Americans get insurance coverage, the need for the government to subsidize hospitals for covering the uninsured will decline.

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Read more: http://online.wsj.com/article/SB124502315952113941.html

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If everyone is insured, there should be very little unreimbursed expenses for doctors and hospitals (relative to what there currently is). You'd think they'd be in favor of this.

[shanti]

1. never underestimate the power of greed

n/t

[dflprincess]

18. It's not all greed

The two hospitals in the Minneapolis/St Paul area who treat most (probably nearly all) the uninsured poor in the area are already facing staggering losses in state money thanks to Pawlently's decision to cut the General Assistiance Medical program rather than sign the DFL's income tax increase.
The people these programs helped (who are the poorest of the poor) are not going to go away and neither Hennepin County Medical Center nor Regions Hospital in St. Paul can turn them away.

Both hospitals are already looking at lay offs as a way to help make up the losses. Care will suffer not just from a lack of money but also from a lack of staff.

[DJ13]

2. Any cuts should be tied to negotiations for a real public option

A bargaining chip to keep the AMA in line.

[Arkana]

3. I hope to god they're right--it's an awful gamble and if it screws up

he's handed the Republicans a massive talking point.

But he predicted this, in a way--he said a while back that healthcare reform would make or break his first term.

[lindisfarne]

5. 1 in 4 Americans (83 million) already get their health insurance through the federal government.

46 million medicare, 11 million military, 8 million SCHIP, rest federal employees & various small federal programs.

Medicare's overhead is miniscule compared to what for-profit & not-for-profit insurance pays in overhead.

1 in 3 Americans not eligible for federally insurance programs are either uninsured (48 million+) or underinsured (25 million+). This does not include many Americans with insurance policies which exclude pre-existing conditions.

Things are already awfully screwed up.

A public program which builds on what Medicare already provides would simplify the problems associated with adding it (this does not mean that the public program could not reimburse at slightly higher rates than Medicare, as Kennedy has proposed).

I have employer provided insurance and my greatest regret is that it is unlikely that I will be able to opt out of the employer-provided insurance and into the public option, with my employer paying for the public option (or at least as much as they pay for the employer-provided insurance).

Public option will NOT wipe out the private insurance market. Germany has a basic public plan available to all citizens. It also has a private insurance market that is heavily regulated. Germany has only 82 million people and many do not buy private insurance.

The US has 300 million people. Even if 119 million people choose the public option IN ADDITION to the 83 million who already get their insurance through the federal government (46 million medicare, 11 million military, 8 million SCHIP; the rest are federal employees and people served by various other smaller programs), there would still be more people left over than the entire population of Germany.

If private insurance works in Germany with heavy regulation AND a public system that guarantees a basic level to every citizen, it can also work in the US. Except the Insurance companies might not be paying their executives and making the massive profits (or "reserves", if it is a non-profit insurance company) that they currently do.

[Arkana]

I just said it was a gamble--not that it was a bad idea.

[MrMickeysMom]

4. Afraid I don't understand this at all...

What "services" exactly can be cut from providers? Are these part A provisions?

Somebody help me out here...

[lindisfarne]

6. To answer your question

First read
http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande?yrail
to understand all the waste in Medicare caused by a subset of physicians who order unnecessary tests & procedures (and financially benefit themselves from this),

then read
http://www.nytimes.com/2009/06/14/us/politics/14address.html
to understand the kinds of cuts Obama is proposing.

"The White House said Saturday that President Obama intended to pay for his health care overhaul partly by cutting more than $200 billion in expected reimbursements to hospitals over the next decade — a proposal that is likely to provoke a backlash from struggling medical institutions around the country.
...
Mr. Obama said he had identified “an additional $313 billion in savings that will rein in unnecessary spending and increase efficiency and the quality of care,” bringing the total to nearly $950 billion. He did not offer a specific breakdown, but advisers said that in addition to the more than $200 billion in lowered hospital reimbursements, the president expected $75 billion in savings over 10 years by getting better prices for prescription drugs, and $22 billion in other savings.

“These savings will come from common-sense changes,” Mr. Obama said in his address. “For example, if more Americans are insured, we can cut payments that help hospitals treat patients without health insurance.”
..
Second, the administration expects to lower payments to hospitals that treat large numbers of low-income patients. Medicare and Medicaid make special extra payments to these hospitals, but Mr. Orszag said those payments would become less necessary over time, as more of the nation’s 45 million uninsured acquire coverage through the new program. This would account for $106 billion in savings."
He added: “If the drug makers pay their fair share, we can cut government spending on prescription drugs. And if doctors have incentives to provide the best care instead of more care, we can help Americans avoid the unnecessary hospital stays, treatments and tests that drive up costs.”

[MrMickeysMom]

10. Thanks.,. I will read that when I'm back today!

I happen to "provide" in an outpatient setting and sub-acute.

I'm particularly concerned with the intent to avoid unnecessary hospital stays, treatments and tests that drive up costs.

Give you my take afterwards.

MMM

[MrMickeysMom]

16. Okay, I think I know what this amounts to, and I couldn't agree MORE...

Taking from your last quote by Obama-

And if doctors have incentives to provide the best care instead of more care, we can help Americans avoid the unnecessary hospital stays, treatments and tests that drive up costs.”

What the US health care delivery system has ultimately been driven to (NOT EVERYWHERE, but evidently includes McAllen, TX) is making matters 10 times worse. This kind of shit started happening in the 80's during the surge of home care, where physicians who would be served best referred services and got kick backs. It resulted in a re-alignment of home care (referred to as the 7 point plan). Of course, the reimbursement that was over-utilized in home care was accompanied by excluding any follow up by a respiratory therapist. That was a little of "throwing the baby out with the bath water". No matter what band aide you put over the systemic problem of how health care is reimbursed, it's too big of a systemic problem. This big issue of over-utilizing is not as bad as under is or mistreatment, but it's just bad. We need more than fixes here and there. So, I'm interested- very interested on how we're gonna fix it.

Them that ride the gravy train under the auspices of best medical practice are to blame. Then, coupled with a systemic problem in WHAT services get reimbursed WHERE are another problem. It's all bring the fucking house down. A good clinician could diagnose without over ordering every damned test known to mankind. The ones who know how to match up a procedural code to a diagnosis code should be ashamed of how they're contributing to all of this!

Thanks for the OP!

[Psephos]

7. Title XVI

Title XVI of the Public Health Service Act, that is.

It requires hospitals to provide a (considerable) regulated percentage of their care free to those unable to pay. Hospitals simply mark up the cost of everything to those who can pay. It's why aspirins cost $16 each, and disposable foam slippers are $70.

So, presuming Title XVI becomes obsolete as the need for "free" care declines, prices charged to those who can pay will decline, offset by being able to charge and collect payment from all patients.

Such a move would, from the hospitals' point of view, be more-or-less revenue-neutral, if prices were set on a cost-of-goods or -services basis. However, the government will almost certainly reimburse less for the treatment of publicly-covered patients than private insurers do now (mirroring the current situation with Medicare/Medicaid).

Such an approach affects the price of care, but not the cost of providing it. It's not hard to see why the hospital industry is "bristling."

[lindisfarne]

8. I'd like to see variable rates of reimbursement within a hospital or office be made illegal. Won't

happen soon but it's ludicrous that it exists. It costs the same to treat a patient, regardless of whether they're on medicare or private insurance. It's not just medicare that gets reduced rates, though. An uninsured patient usually is charged much higher rates than one with private insurance. If we can get rid of most of the overhead spent fighting with insurance companies over coverage, medicare reimbursement rates just might be adequate (or close to that).

I saw an argument made where the person argued that the cost of labor is why a bottle of aspirin (his example) is so costly - the pharmacist must get the container, print a label, put medicine in delivery container, send to ward, nurse must take to patient, check chart, and so on. I'm not sure it can explain all of the cost, but there is a cost for labor, overhead, liability, unreimbursed care to other patients, profit ("reserves"), etc.

[4lbs]

9. A lot of these 'cuts' are elimination of Medicare overcharges.

For example, a procedure that a hospital may charge a private insurance plan only $500 to perform, somehow is charged to Medicare for up to $1000.

Why are they charging Medicare more for the same procedure? It's the same equipment, doctors, nurses, and supplies right?

So, President Obama's Health group will go through and determine how much the hospitals and doctors are charging private insurance companies and if they are charging more to Medicare. If they are, then they'll only reimburse the equivalent of what private insurance does.

[MrMickeysMom]

11. Regionally, these rates differ slightly, but...

... in concert with physician reimbursement rates for procedures. Often private insurers will look at that region's allowable, all figured as a percent of the Medicare allowable.

Unless black is white, I've never heard of private being less than a Medicare allowable rate. It may vary under part A (hospital).

I'm curious, from what area of the country do you draw your information?

[4lbs]

13. Read this article.

http://findarticles.com/p/articles/mi_qn4179/is_20060826/ai_n16693865/

<snip>
Hospitals overcharge Medicare to cover deficits incurred from caring for the indigent among America's 45 million medically uninsured, from underpayment by state and federal programs for the medically indigent and from underpayment by insurance companies and so-called HMOs that have the clout to underpay providers.

Administrators plead this cost-shifting is necessary for them to serve their communities and sustain the American health care system. They see themselves as good guys doing what they have to do - and, to an extent, what they are expected to do.

But this system can be pernicious. If they can get by with manipulating the system some, they also may be tempted to manipulate the system a lot to satisfy and impress their corporate owners.

<snip>


Then there is this:

http://www.mcclatchydc.com/244/story/61200.html

<snip>
Insurance companies involved in the Medicare prescription drug benefit have overcharged subscribers and taxpayers by several billion dollars, according to the inspector general for the Department of Health and Human Services. Eighty percent of the participating insurance companies owe the program an estimated $4.4 billion for 2006 alone.

Medicare, however, has been slow to do something about it. In fact, the agency doesn't even know how much money the insurance companies owe taxpayers because it hasn't begun most of the financial audits needed to determine that.

"It shows a mindset that could care less about wasting taxpayer money, that has no problem with padding profits of drug companies with hard-earned taxpayer dollars," said Sen. Claire McCaskill, a Missouri Democrat.

McCaskill, a former state auditor, has asked the Centers for Medicare and Medicaid Services, which administers the program, to explain why so many audits haven't been done and how it plans to collect the $4.4 billion.
<snip>

[MrMickeysMom]

17. It's not surprising, is it? Part D was set up under Bush, which took ...

an industry that couldn't care less about wasting taxpayer money to new lows by over ordering Medicare allowable procedures. Bush didn't give a shit if there were enough auditors, and the drug companies certainly didn't, either.

I just want to clarify for the sake of "cost shifting" when we talk about the amount Medicare is billed versus other "payers" it's the same amount or damn close to it, depending on how the regional "deciders" feel who contract to control dollars. This Medicare game has been going on for years in various parts of the continuum. The actual amount per procedure from Medicare is not much different than what would be billed to another insurer. These numbers more reflect the number of procedures that are being ordered and billed, thus gaming the system again. Match the service with a diagnostic code. This system is broken.

In the early days of "prospective payment", when hospitals were given an estimated lump sum to provide soup to nuts for an episode of care (matching one or more diagnosis with numbers of procedures aligned with billing codes) I started to see shorter and shorter lengths of hospital stays. To make up for losses resulting in those damned patients staying longer, much of the private pay would be billed WAY above the Medicare allowable, and this was the original cost-shifting game that started. Then, the game was to have enough of a variety of payers (payer mix, Medicare, Medicaid, private, HMO, PPO) to buffer the losses. This is not a good system, because not every episode of care can't have the same outcome, and Medicare is BY FAR the biggest payer out of all of them. Medicare can be a good system, but when it's misused, it's not. Duh, that's an understatement.

This sick system has led the health care delivery to start recouping ways of doing surgery or diagnostics under outpatient services. Enter the health care bean counters in this day who expect all episodes and all sub-specialties to act alike, all patients to act alike, all the things that don't get covered, allowing a revolving door back into the most expensive care (emergency) to perpetuate this mess. We have set up the best surgical and other services, but don't understand how to use services at the lowest end in order to avoid over-using them at the most expensive end.

A real mess, alright.

[Joanne98]

12. I don't like it. He's giving away to much. Can't he save some cards for later?

[dpbrown]

14. Stop balancing the budget on the backs of the poor!

Cut the military budget, for crying out loud!

[Zhade]

15. Silly peasant, Obama already got our votes.

NT!