Medicare Payment, a System in Need of Fixing

[Ed. Note: We are pleased to welcome Andy Braver, Esq. back to Health Reform Watch. Andy is a health care attorney who recently completed an LL.M in Health Law at Seton Hall Law. Prior to entering the LL.M. program, Andy spent five years as a healthcare provider, running a state of the art medical diagnostic imaging center.  During that time, he dealt with many important health law issues faces by providers today, including Fraud and Abuse, Medicare and Medicaid licensing and reimbursement, state and private accreditation organizations, private payers, electronic health records, and HIPAA and other privacy issues, to name just a few.]

Medicare’s fee for service payment system has many problems that need fixing.  While recent studies have predicted that Accountable Care Organizations (ACOs) may very well achieve better care and lower costs, any savings generated as a result of these new groups of providers will be just a drop in the bucket solution to a vast problem.

Medicare was projected to spend over $500 billion on patient care in 2010.  Notwithstanding the fact that the White House Office of Management and Budget believes $36 billion of the Medicare and Medicare Advantage payments made in 2009 were improper.

The problem is, there is no distinction made for the provision of quality medical care.  Conversely, there is no check in the system to make sure that the care provided is inadequate.  If you provide the service, you get paid.

I realize that in many areas of medicine, it is difficult or even impossible to create a system to accurately and impartially judge the adequacy of care provided.  How in fact do you measure the ‘quality’ of healthcare?  Do you look at the structure of an entity, its organization and ability to provide what is generally regarded as good care?  Or do you look at the actual process or provision care, measuring relative malpractice claims among other objective factors?  Many believe that better outcomes suggest better care.  While I do not believe that outcome or evidence based medicine is the answer to every problem, it certainly can be a solution to some of these challenges.

There are differences in the Medicare program based on geography, and local coverage determinations and reimbursement rates, whether using the PPS or RVU systems (Part A & B), vary greatly across the country.  That part of the system makes sense by taking into account cost of living, cost of employment, property costs, and local tax rates.

In my mind, however, these processes fail because they do not further take into account advances in technology, or reward investment in the future.  For example, Medicare pays the same amount of money for an MRI exam regardless of the type of machine that was used to take the picture, and without a thought given to the type of storage system employed by the medical provider.  Imagine a facility with a two decade old system, state licensed and able to take pictures, with a machine equivalent to the first generation digital camera I owned 15 years ago, and printed pictures that are stored in a file room.  Then imagine a state of the art facility with an HD camera taking high resolution digital pictures, stored in an electronic file system, in a format that is able to be sent electronically to specialists all around the country (or world), and accessed by the patient quickly and securely on the internet.  Are those two pictures worth the same to Medicare?  There certainly is increased value to the patient in the ‘new’ system.  Better picture quality undoubtedly leads to better diagnostic capability (better medicine), and fewer picture redos over time; long-term storage and record portability is certainly going to lower future treatment costs if the issue is a chronic one.  HITECH and the new EHR incentive programs recognize the importance of electronic medical records, but it remains to be seen how those requirements will affect licensing and reimbursement rates.  Will there be a license ranking and a tiered payment system based on perceived quality or outcome?

I certainly hope that payments are tiered when advanced technology is used, but not according to self-assessment rankings and quality benchmarks.  I would argue that medicine is the one area where any kind of ranking and result (or outcome) based assessment is virtually impossible.   People are not cars, and JD Power cannot provide meaningful answers when it comes to medicine; there is no way to objectively determine a specific course of treatment for a particular patient is better at one hospital versus another.  No two patients are the same, though it is entirely possible they might both drive the same car.  Determining quality in healthcare is exceedingly difficult.  Patient bases are different, whether because of socio-economic reasons, or geography.  So do you then look to the education of the physician to determine quality?  We don’t do the same for lawyers?  Or do we?  Do you look at healthcare structure (how an entity is organized, its equipment, etc…) to determine quality?  Or process (the # of lawsuits against it, for example)?  Better outcomes alone do not mean better healthcare, and none of these items taken alone should affect licensing of healthcare providers.  In the end, this highlights the fact that designing a system that is fair and without major flaws may never be possible with so much money in the system and with so many parties having opposed interests. But that doesn’t mean we shouldn’t try to fix the expensive and broken (the status quo is unsustainable), it just means that attainable reform could very well mean significantly less unfairness and less major flaws. Because ultimately, in this context, the perfect may be the enemy of the good.

Fraud and Abuse and Why Little Fish Matter

[Ed. Note: We are pleased to welcome Andy Braver, Esq. to Health Reform Watch. Andy is a health care attorney and candidate for the Master of Laws in Health Law degree at Seton Hall University School of Law. Prior to entering the LL.M. program, Andy spent five years as a healthcare provider, running a state of the art medical diagnostic imaging center.  During that time, he dealt with many important health law issues faces by providers today, including Fraud and Abuse, Medicare and Medicaid licensing and reimbursement, state and private accreditation organizations, private payers, electronic health records, and HIPAA and other privacy issues, to name just a few. We look forward to bringing the law based perspective of a provider to the blog.]

Fraud and Abuse is a current health law hot button. Whether looked at from the standpoint of exploding healthcare budgets, or the amount of money being removed from the system by crooked and nefarious actors, there are many opinions on the problem, and what should be done about it.  My views on the subject are colored by my experience as both an attorney and a former healthcare provider.

Recently, I was lucky to hear an enlightening and informative panel discussion with a US Attorney whose post was created specifically to fight health care Fraud and Abuse, and a defense attorney, who spends a good portion of his time defending clients in prosecutions brought by this AUSA’s office.  One of the issues that struck me listening to the discussion is how the lack of resources to fight the problem so greatly affects the reality of how the problem is fought.  Put more succinctly, the government admits it can only go after the big offenders, and those that present immediate danger and potential harm to patients.  As a result, “small time” offenders are often left to flourish without much fear of finding themselves looking down the barrel of a False Claims Act [31 U.S.C. 3729, et seq.] or Anti-Kickback Act [41 U.S.C. 51, et seq.] criminal or civil investigation.

While the overall theory is understandable, does it make sense for the government to make these admissions?  Of course, the government needs to get the most from the resources it has to combat the problem– while also ensuring patient safety is not compromised in any way– but why advertise that limited resources limit investigations and prosecutions?  How then is an attorney to provide counsel in the following scenario: your client, an honest specialty medical provider who has unique offerings to the community (whether specialized training or advanced equipment not found elsewhere), is having trouble breaking into the local market because of a lack of referrals.  It turns out that the competition, in order to protect their business, is paying the gatekeeper (the doctor and/or office manager) at a few referring physician offices for each patient referred (Medicare, Medicaid and even private insurance), in the form of cash or gift cards, paid in small denominations, every week or two.  While the effect this might have on patient care is debatable, there is no question that these payoffs are illegal [41 USC 1320(b)] and [US Attorney Criminal Resource Manual].  There is some question, however, on how the problem should be handled.

The cynic and former healthcare provider in me wants to advise my client to take the easiest route and match the payoff since there is little to fear, but of course, I would NEVER offer such advice, nor condone such behavior.  How, then, do you level the playing field and advise a client who is trying to survive running an honest business, faced with dishonest competition that know that as long as they only cheat a little bit, they will not end up in any kind of trouble?

Is it realistic to ask your client to bring a Qui Tam action against those involved in the payoff schemes?  Was a whistleblower action meant to be used in this kind of small provider situation involving a mixture of federal and private insurance claims?  There will be no treasure trove of documents evidencing the payoffs, no smoking-gun Visa gift cards, and while your client may know the truth about the payoffs, it will ultimately turn into a he-said she-said case without assistance from professional investigators with badges.  Who knows what impact this will have on your client’s business, and whether other referring physicians will want to get involved with your trouble-maker client in the future?  Perhaps you might be able to convince an employee from the dishonest competition to come forward as a relator in order to share in the proceeds of any settlement [31 U.S.C. 3730(d)].  But will the government intervene in a small, low-profile case, then allowing your client to return to life as a full-time medical provider rather than a Qui Tam relator.

I believe that the government would be properly allocating its resources by, from time to time, looking into “smaller” complaints.  These low-hanging-fruit cases are ripe for the picking, and, from my experience as a provider competing in this kind of an environment, a little bit of deterrence will go a long way.  If nothing else, dishonest providers will be more likely to play by the rules if they are fearful that breaking them will result in in bad consequences, and honest practitioners will not have to become experts on the Qui Tam process.