On Saturday the New York Times reported that hospitals and doctors were ripping off Medicare by billions of dollars by abusing the new "money saving" electronic billing system.
Please see our post of September 22 on "Medicare and Third Party Payers ..." for the full story.
Attorney General Eric Holder evidently read the article, as did President Obama and the rest of the administration. They reacted strongly yesterday as described in U.S. Warning to Hospitals on Medicare Abuses:
"Saying there are “troubling indications” of abuse in the way hospitals use electronic records to bill for Medicare and Medicaid reimbursement, the Obama administration warned on Monday that it would not tolerate what it called attempts to “game the system” and vowed to vigorously prosecute doctors and hospitals implicated in fraud.
. . . the letter continued: “There are troubling indications that some providers are using this technology to game the system, possibly to obtain payments to which they are not entitled. False documentation of care is not just bad patient care; it’s illegal.”
“Obviously, we are very concerned” that the adoption of electronic health records “could lead to coding inappropriately,” an administration official said. While aggressively looking for any providers who are committing fraud, the administration will also consider whether it needs to make changes in the way it pays for care.
The letter, sent to five major hospital trade associations, cited possible abuses including “cloning” of medical records, where information about one patient is repeated in other records, to inflate reimbursement.
“There are also reports that some hospitals may be using electronic health records to facilitate ‘upcoding’ of the intensity of care or severity of patients’ condition as a means to profit with no commensurate improvement in the quality of care,” the letter said.
The letter was sent two days after a front-page article in The New York Times detailed the ways in which the greater use of electronic records by hospitals and doctors might be contributing to a rise in Medicare billing. Much of the higher billing is taking place in hospital emergency rooms, where hospitals are classifying many more patients as sicker and needing more care.
Hospitals received $1 billion more in Medicare reimbursements in 2010 than they did five years earlier, at least in part by changing the billing codes they assign to patients in emergency rooms, according to an analysis by The Times of Medicare data from the American Hospital Directory. Regulators also say physicians have changed the way they bill for office visits similarly, increasing their payments by billions of dollars. . . .
The issue of Medicare costs is a contentious one in the presidential campaign and has been a centerpiece of the Obama administration. As part of a push that began under the Bush administration, government officials are spending tens of billions of dollars to encourage hospitals and doctors to use electronic records as a way to reduce costs and improve care. . . .
Rich Umbdenstock, the chief executive of the American Hospital Association, which represents more than 5,000 member hospitals, responded to the administration’s letter, saying hospitals “take seriously their obligation to properly bill for the services they provide to Medicare and Medicaid beneficiaries.”
“We agree that the alleged practices described in your letter, such as so-called ‘cloning’ of medical records and ‘upcoding’ of the intensity of care, should not be tolerated,” he wrote in a letter.
The letter also called for Medicare to develop clear national guidelines for the billing of hospital emergency room and clinic visits."
Here are a few questions for the Obama administration, health care providers and my fellow Americans to ponder.
Can government ever make better decisions than individuals acting in a free market? Can a few regulators and government elitists take care of the many and make detailed rules to govern and effectively administer the health care system, which now represents 1/6 of our economy? Or will all of us always know more than a few of us can ever know, as the free market approach implies? Shouldn't we convert to individual vouchers from government's third party payer system for health care?
To answer these questions, I recommend that the Obama administration, health care providers and We the People take the time to review what a recent commentary had to say in Notable & Quotable:
"Economist Donald J. Boudreaux explains why the data necessary to rationally plan a market economy cannot be known to central government.
Donald J. Boudreaux writing in thefreemanonline.org, Sept 1:
A market economy is indescribably vast and complex—its success depends on so many intricate, changing details all somehow being made to work smoothly together that the "facts" that are essential to its thriving cannot be catalogued with anywhere near the completeness that can be achieved by a 21st-century scientist studying and cataloging the "facts" that enable sparrows to fly. A sparrow is complex compared, say, to a limestone rock. Compared to the modern market economy, however, a sparrow is extremely simple.
A surge in the supply of steel in Detroit for the month of October 2012—an uptick in consumer demand for a specific color of car and a downtick in demand for another color—the possibility of using a new financial instrument to spread investment risks more widely—unexpected difficulties in hiring workers who possess a certain set of skills—an innovation that lowers the costs of advertising—an electrical failure that threatens to shut down for several days a section of a factory—a trucking company that discovers it underestimated the fuel costs of delivering 1,000 new automobiles to dealerships throughout New England. . . . Dealing with details such as these—details that Hayek called "the particular circumstances of time and place"—is not incidental to the success of a modern economy; it is of the essence.
Awareness of these facts, and of knowledge of workable options of how to respond to them, are key to the growth and continued success of any market economy. These facts are dealt with successfully only in market economies and only to the extent that individuals on the spot are free to respond to these facts as they, individually, see fit.
Yet no observer or planner or regulator can see and catalog all these highly specific facts. The facts—each of which must be dealt with—are far too numerous at any moment for an observing scientist to catalog even if that moment were to be frozen for decades. Greatly intensifying this complexity is the reality that these facts are forever changing. A moment from now many of these facts will be different from what they are at this moment.
Nevertheless, too many people, including politicians, continue to believe that because they can observe a handful of bulky facts about the economy, they can thereby know enough to intervene into that economy in ways that will improve its operation. That belief, though, is hubris. It's very much like believing that you'll fly if you simply strap on a pair of wings and commence to flapping madly."
"Hubris" describes very well how government officials think and what they believe.
"Flapping madly" describes how government officials behave and act in health care and far too many other matters as well.
No matter how smart or even well intentioned the bureaucrats and politicians believe themselves to be , they'll never be able to keep pace with individuals acting in their own best interests in a free market based economy.
As free to choose individuals, We the People will always know more than the few government knows best officials will ever know. And they'll always be too slow to react, too.
It's as simple as MOM vs. OPM.
But at least we know the government guys can read the New York Times, and that's a start, I guess.