Crackdown on Fraud and Abuse in Detroit, Miami Signals Health Care Reform as a Priority of the Obama Administration

Federal agents arrested dozens of people in Miami and Detroit yesterday morning for allegedly submitting Medicare claims totaling $50 million for treatments that were unneeded and sometimes never provided, according to The Washington Post.

Later in the day, the Justice Department unsealed criminal indictments against 53 people in connection with the arrests. In Detroit, the indictments focus on costly HIV/AIDS infusion drugs as well as physical and occupational therapy treatments.

According to The Post,

Authorities filed criminal charges against patients, doctors, medical assistants and company owners who allegedly played complicit roles in the fraud schemes. Prosecutors are seeking forfeiture of the criminal proceeds and restitution to the Medicare program.

The action was announced at a news conference held by Attorney General Eric H. Holder Jr., Health and Human Services Director Kathleen Sebelius, and FBI Director Robert S. Mueller III.

We will strike back against those whose fraudulent schemes not only undermine a program upon which 45 million aged and disabled Americans depend, but which also contribute directly to rising health-care costs,

said Attorney General Holder.

Council of Economic Advisors’ Report Outlines the Benefits of Health Care Reform

The President’s Council of Economic Advisors released a new report today examining the economic necessity of health care reform.  In addition to need, The Economic Case for Health Care Reform (PDF) details the anticipated benefits of U.S. health care reform.

The report finds that “If health care costs continue to grow at historical rates, the share of GDP devoted to health care in the United States [will] reach 34 percent by 2040.”  

Citing the strain placed on federal, state, and local governments and the nearly 50 million uninsured Americans, the authors of the report suggest that health care reform is crucial to prevent disastrous increases in the Federal budget deficit.

Two key components of health care reform addressed in the report: (1) the containment of the growth rates of health care costs, and (2) the expansion of insurance coverage.

The Council estimates that slowing the growth of health care costs would have three key effects:

1. It would raise standards of living by improving efficiency. Slowing the growth rate of health care costs by increasing efficiency raises standards of living by freeing up resources that can be used to produce other desired goods and services.

2. It would prevent disastrous budgetary consequences and raise national saving. Because the Federal government pays for a large fraction of health care, lowering the growth rate of health care costs causes the budget deficit to be much lower than it otherwise would have been (assuming that the savings are dedicated to deficit reduction).

3. It would lower unemployment and raise employment in the short and medium runs. When health care costs are rising more slowly, the economy can operate at a lower level of unemployment without triggering inflation.

Likewise, the report outlines three important impacts of expanding health care coverage:

1. It would increase the economic well-being of the uninsured by substantially more than the costs of insuring them. A comparison of the total benefits of coverage to the uninsured, including such benefits as longer life expectancy and reduced financial risk, and the total costs of insuring them (including both the public and private costs), suggests net gains in economic well-being of about two-thirds of a percent of GDP per year.

2. It would likely increase labor supply. Increased insurance coverage and, hence, improved health care, is likely to increase labor supply by reducing disability and absenteeism in the work place.  This increase in labor supply would tend to increase GDP and reduce the budget deficit.

3. It would improve the functioning of the labor market. Coverage expansion that eliminates restrictions on pre-existing conditions improves the efficiency of labor markets by removing an important limitation on job-switching.  Creating a well-functioning insurance market also prevents an inefficient allocation of labor away from small firms by leveling the playing field among firms of all sizes in competing for talented workers in the labor market.

Read the full report here (PDF).

Sebelius is Sworn in as Swine Flu Scare Spreads

It’s official:  Kathleen Sebelius was sworn in as Secretary of the Department of Health and Human Services at a White House ceremony Tuesday night, according to The Kansas City Star.  Sebelius’ appointment comes as fear of a deadly strain of swine flu has spread worldwide. 

The Philadelphia Inquirer reports that federal health officials this morning announced the first confirmed death in the United States due to the swine flu.  According to The Inquirer,

The Centers for Disease Control said the victim was a 23-month old Mexican child who died in Houston. The child had traveled with family from Mexico to Texas and became ill in Brownsville, Houston health officials said. The child died Monday night.   

Four students at the University of Delaware, none of whom had recently traveled to Mexico, are awaiting tests to confirm that they have the swine flu, but preliminary tests indicate a strong likelihood that they do. The Los Angeles Times reports that two recent deaths in Los Angeles County may have been caused by the swine flu, but the exact causes of death have yet to be confirmed.   

With many in Congress rallying to introduce legislation for major health care reform this summer, clearly Secretary Sebelius has a lot on her plate.

HHS OIG Report Finds “High Risk” of Medicare Fraud in South Florida

A report released Tuesday by the HHS Office of Inspector General identifies South Florida as “a high risk area for fraudulent billings to Medicare” by suppliers of durable medical equipment. According to the report, South Florida accounts for 17% of Medicare’s total spending on inhalation drugs, but is home to only 2% of the nation’s Medicare beneficiaries.

While warmer climates are known to cause a variety of respiratory problems, that alone does not explain the “aberrant claim patterns” identified in the report.

In 2007, Medicare spent $143 million on claims for costly drugs to treat respiratory ailments in Miami-Dade County.

That’s 20 times more than the amount Medicare spent in the Chicago area, which has twice as many beneficiaries,

reports the Miami Herald.

The Herald explains the root of the alleged abuse is that two-thirds of the patients in South Florida listed on Medicare claims for expensive inhalation drugs did not have office visits with the physician who prescribed the treatment in the previous three years.

Additionally, medical equipment suppliers and pharmacies are alleged to have recycled the offending doctors’ names for ongoing patient billing, and billed far beyond the Medicare guidelines for inhalation drug therapy. As a result, the Herald says,

Medicare has spent five times more per patient on inhalation drugs in South Florida than the rest of the country — $4,400 versus $815 per beneficiary[.]

Read the HHS Office of Inspector General’s full report here (PDF).

Obama Officially Establishes White House Office of Health Reform

President Obama signed an executive order yesterday establishing the White House Office of Health Reform, taking an important first step in formalizing his plans for U.S. health care reform.  The Washington Post reports that the office will be headed by Nancy-Ann DeParle, a former Clinton administration health official. 

According to the executive order, the White House Office of Health Reform will work with executive branch agencies, state and local officials, and Congress to enact health reform legislation. 

The Office of Health Reform is also charged with bringing to the President’s attention “concerns, ideas, and policy options for strengthening, increasing the efficiency, and improving the quality of the health care system.”  Additionally, the order calls for the office to “develop and implement strategic initiatives under the President’s agenda to strengthen the public agencies and private organizations that can improve the performance of the health care system.”  

Said President Obama in his executive order,

“The health care system suffers from serious and pervasive problems; access to health care is constrained by high and rising costs; and the quality of care is not consistent and must be improved, in order to improve the health of our citizens and our economic security.”   

Obama’s executive order also calls for the establishment of an Office of Health Reform within the Department of Health and Human Services.  Visit HealthReform.gov for more information.

Read the executive order in its entirety here.

Savings Generated From Reducing Hospital Readmissions Could Help Cover the Uninsured

Hospital readmissions cost the U.S. billions of dollars a year, yet many can be prevented with better follow-up care, according to a study published Wednesday in the New England Journal of Medicine.

According to the study,

As many as a fifth all Medicare patients are readmitted within a month of being discharged . . . and a third are rehospitalized within 90 days.

We recently reported that a pilot program in Baton Rouge and 13 other cities seeks to reduce the number of chronically ill elderly that are readmitted to the hospital. That program, called the Care Transitions Project, provides patients with a “transition coach” who helps them recognize symptoms and create a plan for follow-up care.

The New York Times reports that the Obama administration has already identified hospital readmissions as a potential source of cost-cutting. Hospitals with high numbers of patients who are readmitted would receive lowered payments under the president’s budget, which calls for $26 billion in savings from reducing readmissions over 10 years.

Policy analysts say that insurers, including Medicare, must begin to reward doctors and hospitals that help patients get better and stay healthy. While some hospitals have already shown that they can reduce readmissions by taking simple steps, about one in four of the nation’s hospitals derive 25% of their admissions from returning patients.

Alzheimer’s, Dementia Triple Individual Health Care Costs

According to U.S. News & World Report, a recent Alzheimer’s Association report estimates that Alzheimer’s disease and dementia triple health care costs for afflicted seniors.

In its report, the Alzheimer’s Association found that:

The average annual health-care cost for someone older than 65 with Alzheimer’s or another form of dementia was $33,007 in 2004 — three times more than the $10,603 for people that age without the conditions.

Deaths from Alzheimer’s disease rose by 47 percent from 2000 to 2006 while the number of deaths from several other major diseases — including heart attack, stroke, breast cancer and prostate cancer — fell during that period.

States in the Rocky Mountains and Northwest will see the number of people with Alzheimer’s disease increase by at least 81 percent between 2000 and 2025.

By 2025, California and Florida will each be home to more than a half-million people with Alzheimer’s disease.

Experts agree that the U.S. needs to invest more into Alzheimer’s research to keep costs low in the future. Some even advocate that the U.S. Government double its annual budget for Alzheimer’s research to $1 billion.

The aging of the Baby Boom Generation is one of the major reasons for the growing concern over the costs of living with Alzheimer’s disease. Said Dr. P. Murali Doraiswamy, a psychiatry professor at Duke University Medical Center,

The bottom line is that we are an aging society, and if we don’t find a cure to delay or halt the disease, we are soon going to become an Alzheimer’s nation.

Pilot Program Seeks to Educate Patients, Prevent Illness, and Save Billions

A pilot program aimed at reducing Medicare costs by “stopping the revolving door of hospital admissions by some chronically ill elderly” is taking shape in Baton Rouge, Louisiana.  According to the Baton Rouge Advocate, the program, called the Care Transitions Project, could be a model for U.S. health care reform if it is successful in Baton Rouge and 13 other participating communities.

The program seeks to provide patients and caregivers with information before they leave the hospital in order to prevent problems that could lead to readmission.  Fundamental to the program is the use of a “transition coach” who helps the patient put together a list of questions for their primary care physician, discusses questions about medications, and puts together a plan for “self-care.”  This allows the patient to be mindful of preventive measures and symptoms to be on the lookout for.

The patient signs a consent form in which they agree to meet with the transition coach before leaving the hospital and again within 48 hours of leaving. There is an additional follow-up at a week, two weeks, and a month.

Gary Curtis, head of Louisiana Health Care Review, says that:

In Louisiana, two out of every 10 chronically ill elderly patients are back in the hospital within 30 days of their release.

However, the problem is not confined to Louisiana.  According to statistics from the Centers for Medicare and Medicaid Services,

Nationally, the readmissions and subsequent treatment contribute to a $12 billion annual increase in Medicare costs.

Other communities engaging in the pilot program include Denver, Colorado and Miami, Florida.  Click here for more information about the Care Transitions Program.

Baucus’ Baby Boom Buy-In

There are over 5.1 million uninsured Americans between the ages of 55 and 64.  Given the current economic climate and increasing unemployment rate, that number is sure to increase as employers lay off baby-boomers to cut the costs of providing them with benefits.

Senate Finance Committee Chair Max Baucus (D-Mont.) proposed a plan for health care reform last November that allows Americans ages 55 through 64 to buy into Medicare.  Baucus’ plan would allow members of that age group who are currently uninsured or who have lost their employment to pay a monthly premium and receive Medicare benefits.

Sunday’s Charleston Gazette examined Baucus’ plan to allow 55- to 64-year-olds to buy into Medicare.

The idea has been around for years, but it has gained new currency as the recession deepens and a Democrat-run Congress and White House begin to discuss health-care reform.

Advocates of an early Medicare buy-in say it would complement other entitlement reforms because it would keep older workers healthy and productive longer and help rein in government spending over the long haul,

said The Gazette.

Read more

Sebelius to Head HHS, Not Everyone is Thrilled

President Barack Obama formally nominated Kansas Governor Kathleen Sebelius as Secretary of Health & Human Services today, according to USA Today.  We have been following the likelihood of Sebelius’ nomination since Tom Dachle withdrew his nomination last month.

Sebelius made a reputation for herself as Kansas’ insurance commissioner for eight years before being elected governor.  While insurance commissioner, she established herself as a consumer advocate capable of reining in health care spending.

Sebelius has been the favorite to head HHS, but her nomination has raised concerns among anti-abortion advocates such as the conservative Catholic League, according to U.S. News.  Troy Newman, president of Wichita-based Operation Rescue, says that the group will aggressively oppose Sebelius’ confirmation in the Senate.

According to KSALLink.com, Sebelius said in a statement responding to the issue that as a public official she has worked hard to ensure that abortions are “rare, safe and within the bounds of the law.”

President Obama will host a summit later this week with representatives from various health care sectors to address his plans to revamp the U.S. health care system.  No word on whether Howard Dean, a physician and former governor of Vermont, will be in attendance.  FOXNews.com reports that Dean has expressed his disappointment with being passed up for the nomination again, stating:

“I was pretty clear that I would have liked to have been Secretary of HHS but it is the president’s choice and he decided to go in a different direction.”

Two New Reports Look at Increases in Health Care Spending

The Wall Street Journal reports that CMS estimates overall U.S. health care spending will reach $4.35 trillion in 2018, accounting for one-fifth of GDP. The findings by CMS were published Tuesday in the journal Health Affairs. In 2009, U.S. health care spending is expected to reach $2.5 trillion, a 5.5% increase from 2008.

The CMS study expects government health care spending to increase by 7.4% to $1.19 trillion this year. However, the study forecasts that, by 2016, the government will pay for more than 50% of total health care spending. The increase in government health care spending is expected to come from baby boomers enrolling in Medicare and increased enrollment in Medicaid.

Meanwhile, The New York Times reports that Medicare spending continues to vary widely across the U.S., according to a report to be published today in The New England Journal of Medicine.

According to The Times, Dartmouth researchers found that:

The regional differences in the growth of Medicare spending suggest doctors are helping to drive up costs when they more frequently order tests or admit patients to the hospitals. In areas where there are plenty of hospital beds and sophisticated imaging equipment available, doctors generally spend more on their patients.

Dr. Elliott S. Fisher, the director of the Center of Health Policy Research at the Dartmouth Institute for Health Policy and Clinical Practice and one of the work’s authors, told The Times that:

[A]ny attempt to rein in health care costs . . . needs to address how doctors and hospitals are paid, where they are rewarded on the basis of the volume of services they perform.

Read more

Obama to Unveil Plan for Health Care Reform

With the economic stimulus package signed, President Obama will turn his focus to “revamping the U.S. health care system,” according to Bloomberg.com. Obama is expected to outline his plan for providing affordable medical coverage to all Americans when he submits his budget to Congress on February 26.

During his campaign, Obama proposed creating a public plan to compete with private health insurers and taking steps to reduce administrative costs, such as putting health records in digital form.

Bloomberg.com reports that an administration official said the president may look to reduce payments to private Medicare Advantage plans to help pay for the changes.

Democrats estimate that $15 billion of the annual $94 billion in subsidies granted to Medicare Advantage plans are the result of “overpayments.” The private insurance companies that administer those plans counter that the money is used to pay for services not covered under Original Medicare, such as prescription drugs and vision, dental, and chiropractic care.

It follows that the president will likely make public his nomination for secretary of health and human services soon after he unveils his plans for health care reform. Kansas Governor Kathleen Sebelius has been touted as the front-runner for the nomination.

However, according to the AP/Kansas City Star, Governor Sebelius has not yet spoken with President Obama regarding the position. The Obama administration is reportedly using “extreme caution” in choosing the next nominee in order to avoid another embarrassing mistake.

ABC Special Highlights the Need for Education After SCHIP Expansion

ABC aired A Hidden America: Children of the Mountains last Friday with host Diane Sawyer. Children of the Mountains follows the lives of several children growing up in Central Appalachia.

The special raised several crucial issues, but I was struck by the lack of healthcare available to Appalachian children. Sawyer reported that a diet consisting of high-fat, salty foods and massive amounts of soda pop, particularly Mountain Dew, are responsible for a range of adverse childhood and adolescent health conditions.

One of the most serious health conditions addressed by Children of the Mountains is toothlessness. Sawyer explored how the consumption of large quantities of sugary sodas like Mountain Dew causes extensive cavities and tooth decay. Additionally, Appalachian children experience a lack of resources and health insurance coverage that surpasses that of many other low-income Americans.

The expansion of the State Children’s Health Insurance Program signed into law by President Obama last month requires all states to provide dental care to enrollees. While this is encouraging in light of the serious deficiencies in the availability of dental care to Appalachian children, The Kaiser Family Foundation reports that in 2004, 5.4 million uninsured children were eligible for SCHIP or Medicaid but not enrolled.

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New Candidates to Head HHS Emerge, Suspense Mounts

Two additional candidates have emerged as possible nominees to be secretary of health and human services, reports The Washington Post. According to Democratic sources in and around the White House, those candidates are Lloyd Dean and Jack Lew.

Dean is chief executive of San Francisco-based Catholic Healthcare West and was recently named one of the top 25 minority health care executives by Modern Healthcare Magazine. Lew was involved in health care reform during the Clinton Administration and worked in the White House Office of Management and Budget, according to The Post. One small snag, reports The Post, is that Lew was recently confirmed as deputy secretary of state.

Yesterday we reported that Kansas Governor Kathleen Sebelius was at the top of Obama’s list to replace former Senator Tom Daschle as the nominee for U.S. Secretary of Health & Human Services. Sebelius removed herself from consideration for a cabinet position last December, citing the need to reform Kansas’ budget. However, The Wall Street Journal reports that Gov. Sebelius told Ron Pollack, president of Families USA, that she would accept the nomination for secretary of health and human services.

Sebelius, Podesta on Obama’s Short List to Replace Daschle

A top official in the Obama administration says that Kansas Governor Kathleen Sebelius is at the top of the list to replace former Senator Tom Daschle as President Obama’s nominee for Secretary of Health & Human Services, according to the AP/Kansas City Star. This comes after Daschle withdrew his nomination last week, leaving many wondering about the future of U.S. health care reform.

Sebelius has been praised by advocacy groups for the “watchdog role” that she played for eight years as insurance commissioner before she became governor. The Kansas Governor was an early supporter of Obama’s campaign for the presidency. After Obama won the election in November, she was in consideration for several cabinet posts. In early December though, she announced that she had removed herself from consideration for a Washington job, citing Kansas’ budget problems that needed her attention.

Also on Obama’s short list is former White House chief of staff under President Clinton, John Podesta, and Tennessee Governor Phil Bredeson. Some advocacy groups are reportedly lining up to oppose the nomination of Democratic governor from Tennessee. Bredeson remains under consideration but was not as likely as Sebelius to make the final cut, the senior official said.

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