Monday, April 25, 2005


Managing the mundane

This is the BEGINNING of my primordial Medicare Rant.

Like many government programs, Medicare was started as a good idea. In the 60's the costs of medical care were slowly rising and the brunt of medical costs were for the care of hospitalized elderly. The government recognized the plight of the income-limited elderly and they created a safety net program to cover the excess costs of medical care.

From that good idea arose the nightmarish quagmire that exists today.

The first problem that arose was price inflation. To understand the impact that Medicare had upon the cost of medical care, we need first understand the prior impact that private insurance had on the cost of medical care.

Prior to the 50's medical insurance was rare. It became popular after WWII when the government, in an effort to support the economic growth in the post-war years made it advantageous (via tax breaks) for companies to offer health care insurance to the workers as part of their compensation package. Health care insurance became popular. It was called "Hospitalization insurance". It covered a percentage (about 80%) of the cost of hospitalization. For working men and their young families this usually came down to catastrophic illness and surgery. This led to the unregulated rise in the cost of hospitalization and medical procedures, almost exclusively surgical procedures. Despite the rise in the cost of hospitalization and surgery, medical care remained a reasonable expense and was not a burden on the individual and was no burden of the federal budget.

Medicare covered the hospitalization and the outpatient costs for the elderly. Here was a population that REALLY consumed medical resources. The think tanks that budgeted Medicare vastly underestimated the costs of this program. In the first years the actual expenditures were over 300% of what was planned. Every year they increased the budget to account for the previous years vast shortfalls, and still the cost rose at ballistic rates. Surgery and hospitalization was compensated, no matter the cost. Primary care was neglected. The gap in physician fees became vast, surgeons and hospital specialists earning ten to one hundred fold the fees of generalists and pediatricians.

Private insurance companies began to use the Medicare plan as a model.

To contain the costs the government added more and more controls. The controls became nonsensical. The private insurers followed suit.

The Medicare managed Care debacle and the Relative Value Scale disaster will be fodder for future blogs.

In time Medicare has risen to be the largest insurer of all time. It is managed by private companies on a regional basis. The rules dwarf the IRS code by over one hundred pages to one. The administrative costs of Medicare are now almost seventy five percent ( $0.75/dollar!) Medicare makes up one third of the Federal budget, and increases yearly. Since 1980 the cost of Medicare has exceeded the defense budget and is now nearly twice as large.

But remember, three-quarters of the Medicare budget is administrative.

With the regulations being so vast, no one on the planet understands them all. No one has ever actually READ them all. New regulations are promulgated every day, often revoking or altering regulations formulated just days or weeks before. I am blessed to receive e-mails with every change. I have received over one hundred such e-mails in the last six months, many with multiple notifications.

The Medicare rules do not dictate what can or cannot be done. They dictate what will be paid for what is done for what reason. And they dictate how one must submit the information to Medicare.

It is ESSENTIAL, apparently, that SOMEONE in the government needs to know exactly what the diagnosis is for every procedure done, and that it be coded according to the AMA's copyrighted code, the ICD-9. The ICD-9 is a markedly imperfect coding schema, essentially useless. This will be the subject of ANOTHER blog. The procedures performed must be coded according to another AMA copyrighted code , the CPT. Of course, everyone must pay the AMA for the use of these copyrighted codes. (Yes, the inspiration for yet another future blog!)

In any case, if the regulations allow a procedure for a certain diagnosis, then the government MAY pay for it. Anything done to KEEP one healthy or for early detection of occult disease is REJECTED, unless it is politically necessary for it to be reimbursed (like a flu shot, which is reimbursed at a fraction of its actual cost).

That's enough for today.... Stay tuned!

Comments: Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?