Why Medicare Sucks Part 3

by Ouida on May 25, 2010

In part 2 we 3 concepts: 1) no two doctors are alike and consumers cannot make informed choices about their doctors because certain data is not generally known 2) attempts to reduce costs have actually increased costs by spawning additional industries deemed essential to make sure that providers are paid for the work they perform 3) physicians are not reimbursed 100 cents on the dollar.

Now here is the kicker.  Medicare is almost always the low payer.  Several years ago, I went to visit friends both in private practice in Southern California.  One of them, an orthopedic surgeon, told me what the reimbursement was for her to see a patient with a fractured hip in her office.  The number was so low, I hesitate to repeat it, but let’s just say it was low double digits, about as low as you can go  and still be in double digits.  My friend had $14,000 per month in overhead.  She asked a reasonable question, how many patients do I need to see at this reimbursement rate to cover my overhead?  There is a difference between the number of patients a physician has to see at a given rate of reimbursement to meet their overhead and the number of patients a physician can see and have a safe medical practice.  Guess which number is lower.  I had an open and frank conversation with my friends while sitting on a beach in Santa Monica.  It is hard for any number of physicians to get together and not have a conversation like the one we had on the beach that day.  Our conversation was impassioned and as a result some beach goers edged in a little closer to overhear our conversation.  When we realized that we had a small audience we made a move to leave.  One guy actually said that he had no idea that health care was as fragmented as it is and payment for services rendered so difficult.

In the first post in this series I said that America suffered from a Walmartization of its very consciousness.  We want to get as much as we want and pay as little as possible.  In so doing we forget that quality costs.  We complain about crowded physician waiting rooms and busy physicians who spend little time with their patients, but we forget that if that physician is being paid $30 dollars for a visit, he has to see a lot of patients to make sure his coding and compliance departments, office staff, office rent, equipment leases and malpractice premiums are paid.  Physician reimbursement can be ratcheted to zero and health care would still be expensive.  Paying $80 dollars for a procedure that really does cost $100 dollars is not controlling health care costs.  It is cheating physicians, hospitals and ancillary staff.  The only thing that will control health care costs is the one thing that we as a society do not want to do:  Restrict access to care, specifically new technology, until that technology has been proven through appropriate study to be cheaper in the long run and at least as effective as proven technologies already on the market.  Until we do that, we will simply commit theft in an attempt to control costs and costs will continue to spiral upward.

The physicians that drop Medicare do so because 1) Medicare is the lowest or one of the lowest payers in their payer mix and 2) the costs of compliance outweigh the benefits of accepting Medicare payments into their practices and 3) Medicare is a relatively small percentage of their practice.  These criteria will in general apply to sub-specialists.  Primary care physicians who may not be able to depend on the influx of patients under 65 to offset the impact of Medicare on their practices are likely to continue to accept Medicare.  Some physicians feel it is their duty, despite the hassles, to accept Medicare. I still reflect in wonder on a conversation that I had with a physician who practiced in Oklahoma many years ago who told me that the happiest day in his practice what when he started refusing to accept Medicare and Medicaid.  I had just begun my medical practice and I was actually offended by his attitude.

Today, I am forced to conclude as I did recently in dinner conversation with friends, that if the majority of physicians could exit Medicare they would.

What we need to do in America is start over.  If we are going to have a single payer system, then we need to fund that system and everyone must pay into it in the form of a designated tax.  We need to define a very basic level of care that system will provide.  Then if people want additional coverage which they will, they need to go to the private sector to get that coverage.  The woman that I mentioned in the first post in this series who wants the experimental procedure to address her uterine fibroids and abnormal bleeding should have to shoulder a significant burden of that cost and she should do that through a supplemental plan that spells that out.  In our current system, everyone is spending someone else’s money and there is little incentive to cut costs.  My concern with our current reform plan is that it is paid for by a tax on the top 2% of income earners rather than the costs being shared by all, the penalties for remaining uninsured are not sufficiently onerous to encourage people buy insurance and the tax on Cadillac plans a tax that might actually impact rising costs is not due to take effect until 2018.

So the concepts here are that

1) Medicare is the low payer and the costs of compliance outweigh the benefits

2) The way to control costs is to restrict access to care and one way to do this is to have consumers shoulder a greater part of the burden for some care

3) New technology should only be adopted when it is adequately studied and proven to be just as effective and cost less than established technology

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federal student loan May 26, 2010 at 8:33 am

Pretty nice post. I just stumbled upon your blog and wanted to say that I have really enjoyed browsing your blog posts. In any case I’ll be subscribing to your feed and I hope you write again soon!


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