Health Care Reform Articles - August 31, 2023

I Set Out to Create a Simple Map for How to Appeal Your Insurance Denial. Instead, I Found a Mind-Boggling Labyrinth. 

by Cheryl Clark for ProPublica, Aug. 31, 2023

I spoke with more than 50 insurance experts, patients, lawyers, physicians and consumer advocates about building a tool anyone could use to navigate insurance appeals. Nearly everyone said the same thing: Great idea. But almost impossible to do. 

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published. This story was co-published with The Capitol Forum.

Have you ever had a health care claim denied by your insurer? Ever tried to appeal it? Did you wind up confused, frustrated, exhausted, defeated?

I’ve been a health care reporter for more than 40 years. And when I tried to figure out how to appeal insurance denials, I wound up the same way. And I didn’t even try to file an actual appeal.

ProPublica came to me earlier this year with what might have seemed like a simple proposition. They wanted me to create an interactive appeals guide that would help readers navigate their insurers’ maze. (A team of reporters at ProPublica and The Capitol Forum has been investigating all the ways that insurers deny payments for health care. If you’ve got a story to share, let them know here.)

Over the next several weeks, I spoke with more than 50 insurance experts, patients, lawyers, physicians and consumer advocates. Nearly everyone said the same thing: Great idea. But almost impossible to do. The insurance industry and its regulators have made it so complicated to file an appeal that only a tiny percentage of patients ever do. For example, less than two-tenths of 1% of patients in Obamacare plans bothered to appeal claims denied in 2021.

The central problem: There are many kinds of insurance in the U.S., and they have different processes for appealing a denial. And no lawmakers or regulators in state and federal governments have forced all insurers to follow one simple standard.

I tried to create a spreadsheet that would guide readers through the appeals process for all the different types of insurance and circumstances. When a patient needs care urgently, for instance, an appeal follows a different track. But with each day of reporting, with each expert interviewed, it got more and more confusing. There was a point when I thought I was drowning in exceptions and caveats. Some nights were filled with a sense that I was trapped in an impossible labyrinth, with signs pointing to pathways that just kept getting me further lost.

Here are some of the issues that make it so confusing:

First, people have to know exactly what kind of insurance they have. You may think that UnitedHealthcare is your insurer because that’s the name on your insurance card, but that card doesn’t tell you what kind of plan you have. Your real insurer may be your employer. Some 65% of workers who get their coverage through their employers are in what’s known as “self-funded plans,” according to KFF (formerly Kaiser Family Foundation). That means the employer pays for medical costs, though it may hire an insurance company like UnitedHealthcare to administer claims.

The other main type of insurance that companies provide for their workers is known as a “fully insured plan.” The employer hires an insurer to take all the risk and pay the claims. With that kind of plan, the name on your card really is your insurer. Why does this difference matter? Because the route you follow to challenge an insurance denial can differ based on whether it’s a fully insured plan or a self-funded one.

But all too often people don’t know what kind of plan they have and aren’t really sure how to find out. I’m told that some employers’ human resources departments don’t know either — although they should.

“It is a little scary, because people honestly don’t really know what they have,” said Karen Pollitz, a senior fellow at KFF who specializes in health insurance research. “I’m just going to warn you that if you set up the decision tree with an A: yes, B: no, or C: not sure, you’ll find a lot of people clicking not sure.”

Government insurance is its own tangle. I am a Medicare beneficiary with a supplemental plan and a Part D plan for drug coverage. The appeals process for drug denials is different from the one for the rest of my health care. And that’s different from the process that people with Medicare Advantage plans have to follow.

A spokesperson for the Centers for Medicare & Medicaid Services, the federal agency that oversees Medicare, wrote in an email that the agency “has been actively engaged in identifying ways to simplify and streamline the appeals process and has worked with stakeholders and focus groups to identify ways to better communicate information related to the appeals process with the beneficiaries we serve.”

And we can’t forget about Medicaid and the Children’s Health Insurance Programs, which together covered 94 million enrollees as of April, more than a quarter of the U.S. population. The federal government sets minimum standards that each state Medicaid program has to follow, but states can make things more complicated by requiring different appeal pathways for different types of health care. So the process can be different depending on the type of care that was denied, and that can vary state to state.

And don’t even get me started on how baffling it can be if you’re one of the 12.5 million people covered by both Medicare and Medicaid. As far as which appeals path you have to take, Abbi Coursolle, a senior attorney with the National Health Law Program, explains: “It’s Medicare for some things and Medicaid for others.”

I sought help from Jack Dailey, a San Diego attorney and coordinator for the California Health Consumer Alliance, which works with legal-aid programs across the state. On a Zoom call, he looked at an Excel spreadsheet I’d put together for Medi-Cal, California’s Medicaid program, based on what I had already learned. Then he shook his head. A few days later, he came back with a new guide, having pulled an all-nighter correcting what I had put together and adding tons of caveats.

It was seven single-spaced pages long. It detailed five layers of the Medi-Cal appeals process, with some cases winding up in state Superior Court. There were so many abbreviations and acronyms that I needed to create a glossary. (Who knew that DMC-ODS stands for Drug Medi-Cal Organized Delivery System?) And this was for just one state!

Dr. Christianne Heck, a neurologist specializing in epilepsy with Keck Medicine of the University of Southern California, said her health system has a team of professionals dedicated to appealing denials and making prior-authorization requests — where you have to call the insurer and get approval for a procedure beforehand.

“It’s a huge problem,” Heck said. “It usually takes multiple attempts. We have to play this horrible, horrible game, and the patients are in the middle.”

It’s especially complicated in oncology, said Dr. Barbara McAneny, a former president of the American Medical Association who runs a 6,000-patient oncology practice in Albuquerque, New Mexico.

“My practice is built on the theory that all the patients should have to do is show up and we should manage everything else … because people who are sick just cannot deal with insurance companies. This is not possible,” she said.

McAneny told me she spends $350,000 a year on a designated team of denial fighters whose sole job is to request prior authorization for cancer care — an average 67 requests per day — and then appeal the denials.

For starters, she said bluntly, “we know everything is going to get denied.” It’s almost a given, she said, that the insurer will lose the first batch of records. “We often have to send records two or three times before they finally admit they actually received them. … They play all of these kinds of delaying games.”

McAneny thinks that for insurance companies, it’s really all about the money.

Her theory is that insurance companies save money by delaying spending as long as possible, especially if the patient or the doctor gives up on the appeal, or the patient’s condition rapidly declines in the absence of treatment.

For an insurance company, she said, “you know, death is cheaper than chemotherapy.”

I asked James Swann, a spokesperson for AHIP, the trade group formerly known as America’s Health Insurance Plans, what his organization thought of comments like that. He declined to address that directly, nor did he answer my question about why the industry has made appealing denials so complex. In a written statement Swann said that doctors and insurers “need to work together to deliver evidence-based care and avoid treatments that are inappropriate, unnecessary, and more costly. Most often, a claim that is not immediately approved just requires the provider to submit additional information to appropriately document the request, such as the diagnosis or other details. If a claim is not approved after correct and complete information is submitted, there are several levels of appeal available to the patient and their provider.”

Swann outlined some of the appeals steps available, including a review by a doctor who wasn’t involved in denying the claim initially, the chance to submit additional clinical rationale and a review by an entity that’s independent of the insurer. He also noted that Medicare Advantage and Part D programs have multiple levels of appeals before winding up in court, including a step that requires a review by an outside, independent organization.

Domna Antoniadis is a health care attorney in New York who co-runs the Access to Care nonprofit, which educates patients and providers on their health insurance rights. She spent hours helping me navigate various appeal systems.

She offered up one important tip for people who use commercial insurance: Get the full plan document for your policy and read it. It’ll be around 100 pages and will tell you what medical services are covered and detail all the steps needed to appeal a denial. Don’t rely on the four-page summary, she said. It probably won’t help.

Likewise, Medicare, Medicare Advantage and Medicaid denial letters should explain the steps to appeal the decision.

When you can, enlist the help of your medical provider. Sometimes an insurer says no to a claim because a doctor’s office submitted it under the wrong code, and that can be fixed quickly.

Antoniadis acknowledged the challenges but believes that consumers have a lot more power than they realize. They can push back to advocate for themselves.

“The appeals process is not always handled properly by the plans, which is why consumers need to report and complain to their relevant government regulators when they believe they’ve been unfairly denied,” she said. “That’s integral to changing the system.”

https://www.propublica.org/article/how-to-appeal-insurance-denials-too-complicated 

 

Biden administration names 10 prescription drugs for price negotiations

By Amy Goldstein and Daniel Gilbert - Washington Post - August 29, 2023

The Biden administration Tuesday identified 10 expensive prescription drugs that will be included in price negotiations with pharmaceutical manufacturers as the government seeks to ease the financial burden on older and disabled Americans, an unprecedented step in a long political war over the nation’s exorbitant drug costs.

Half of these first drugs chosen for price negotiations are medications used to prevent blood clots and treat diabetes and were taken by millions of people on Medicare in the past year, according to a list released by federal health officials who oversee Medicare, the vast public health insurance system. Others are used to treat heart trouble, autoimmune disease and cancer.

The top three of the 10 drugs on the widely anticipated list include Eliquis, a blood thinner; Jardiance, which treats diabetes and heart failure; and Xarelto, another blood thinner. They cost Medicare $16 billion, $7 billion and $6 billion respectively in the past year.

Medications could be targeted for price negotiation if they are available under Medicare drug benefits, lack certain competition to push down their prices and have been sold for at least several years to give drugmakers time to help recoup the expense of developing them.

Tuesday’s step toward reducing Medicare drug prices was a significant element in last year’s Inflation Reduction Act, a law that President Biden and his aides herald as a policy victory, even though the number of medications and the timing of the first price reductions — 2026 — are less ambitious than some Democrats had sought for many years. And the fate of the entire negotiation plan rests with the courts because six drug manufacturers, the Chamber of Commerce and the pharmaceutical industry’s main trade group have lodged separate lawsuits around the country trying to block it.

Still, the Biden administration, Democratic allies in Congress and consumer health-care advocates portrayed this initial list of 10 drugs as a milestone to shore up the financial stability of the Medicare system and ease the burden on its beneficiaries. Medicare is a federal insurance system for people who are at least 65, along with younger adults who have disabilities. When last year’s law passed, the Congressional Budget Office predicted the negotiations would save the program slightly more than $100 billion during the following decade.

More than 60 percent of the 65 million people on Medicare take prescription medication, and 25 percent take at least four prescriptions, according to a survey this summer by KFF, a health-care policy organization.

The rest of the list consists of Januvia, Farxiga and NovoLog, which treat diabetes among other conditions; Enbrel and Stelara, for arthritis and psoriasis; and Entresto, for heart failure; and Imbruvica, for cancers of the blood.

Wall Street analysts widely expected that most of the 10 drugs selected for price negotiations would appear on the list, based on Medicare expenditures and their sales in the United States, among other criteria. For seniors enrolled in Medicare, their average, annual out-of-pocket costs ranged from $121 for diabetes drug NovoLog to $5,247 for cancer-drug Imbruvica, including those with financial assistance. All told, HHS estimates that about 9 million seniors enrolled in Medicare’s prescription drug program used one or more of the 10 drugs in 2022, and paid a total of $3.4 billion out of pocket.

The 10 drugs identified Tuesday represent the first wave of medicines destined for price negotiation, with the roster expanding in future years. For this initial batch, manufacturers have until the start of October to agree to price negotiation with the Centers for Medicare and Medicaid Services. If they do, the companies will quickly need to disclose an array of data to CMS for each selected drug regarding revenue and what the manufacturer spent to research, develop and produce it.

If a manufacturer refuses to negotiate or won’t agree to what federal rules call a “maximum fair price,” the company will face a substantial tax or must withdraw from Medicare and Medicaid, the nation’s largest public health insurance program designed for people with low incomes.

To be considered for the price negotiation, a drug must have no competition from a less expensive generic competitor, and a biologic — a category of drugs made from living organisms — must not compete with any cheaper version known as biosimilars. The number of drugs involved will expand slightly during the next two years, with a total of 15 each of the next two years and 20 drugs in following years. This year and next, the drugs are part of Medicare’s Part D, the program’s drug insurance created two decades ago. After that, the drugs can come from Part D or from Part B, such as cancer therapies, which are administered by doctors.

Limited though it is, the arrival of Medicare drug price negotiation is a sharp break from Medicare’s history. When the program was created in the 1960s, it covered drugs that were administered in a doctor’s office — Part B — but excluded medications that patients took on their own. Despite efforts over the decades to add outpatient drug benefits, they were woven into larger health-reform proposals that failed, and the broader drug benefits did not become part of the program until a set of Medicare changes adopted by Congress in 2003. To win Republican support, that statute included language that prohibited any role for the government to negotiate medication prices. The 2022 Inflation Reduction Act — known as IRA — rescinded the prohibition.

Since the outpatient drug benefits embedded in the 2003 law began three years later, Medicare beneficiaries have been able to get that coverage by buying a separate drug plan — through Part D — or as part of managed-care plans, known as Medicare Advantage. Either way, beneficiaries still pay some of the cost of getting the medicines, and the government has not influenced the prices that pharmaceutical companies set.

The push for price negotiation faced intense opposition from pharmaceutical companies, which contend that capping potential earning erodes their ability to invest in further research and development. After a rare loss on Capitol Hill, the industry and its business allies have turned to the courts, with the eight cases that could take years to resolve and could land before the Supreme Court.

If the negotiation process stands, industry analysts predict it will have profound ripple effect. Prices negotiated and made public by Medicare could affect negotiations between commercial insurers and drugmakers. In turn, pharmaceutical companies could focus on developing larger-molecule drugs — such as vaccines and gene therapies — that are exempted from potential Medicare price negotiations for a longer period than prescription pills.

The ultimate impacts of the law are hard to predict. Even companies critical of it acknowledge they could benefit from provisions that make their medications more affordable to patients.

“The IRA law is not all gloom and doom for biopharma, since it will reduce seniors’ out-of-pocket” costs, motivating patients to stay on them longer, according to analysts at Leerink Partners, a health care-focused investment bank. And some drugs designated for negotiation at first might not remain on the list for long, because they are scheduled to lose their patent protection soon after the lower prices take effect, meaning they would have competition and no longer be eligible for the negotiated prices.

For the Biden administration, the Inflation Reduction Act provision is a centerpiece of a battle to curb drug prices that it is waging on several fronts.

Under the law, Medicare beneficiaries pay a limit of $35 a month for insulin. Biden issued an executive order last year directing the Department of Health and Human Services to study new models to lower drug costs for Medicare and Medicaid beneficiaries. In May, HHS proposed a rule that would give the department and states more leverage to negotiate payment for the most expensive drugs covered by Medicaid. And the Federal Trade Commission has taken a more aggressive approach to pharmaceutical mergers, citing concerns about price increases when it filed suit in May to block Amgen from acquiring Horizon Therapeutics — even though the two companies don’t directly compete.

Because the impact of the Medicare drug price provision will unfold over years, the negotiated prices may have a minimal effect on some drugs, including Eliquis, a blood-thinning medication that cost Medicare $6.2 billion in 2021, by far the most of any drug. Eliquis, made by Bristol Myers Squibb and Pfizer, is set to lose patent protection in 2026, the year that Medicare’s negotiated prices first takes effect.

“Whatever the impact is will not be long lasting on our portfolio,” Angela Hwang, Pfizer’s chief commercial officer, said of Eliquis in a call with financial analysts this month, according to a transcript compiled by S&P Global Market Intelligence.

Bristol-Myers Squibb said in a statement Tuesday that Eliquis “was targeted for this program due to the sheer number of Medicare patients who benefit from the medicine, not its price.”

For now, companies are already considering the law’s effects when crafting strategies to develop or acquire drugs. Novartis, for instance, looks for acquisitions where “we think we have opportunities to either manage the IRA impact or avoid the IRA impact,” CEO Vasant Narasimhan said on an earnings call last month.

https://www.washingtonpost.com/health/2023/08/29/medicare-drug-price-negotiations/ 

Northern Light Health challenges Brewer over loss of tax exemption at some facilities 

by Patty Wight - Maine Public - August 25, 2023

Northern Light Health is challenging the city of Brewer in a disagreement over its tax exempt status.

Northern Light officials say Brewer's tax assessor has decided that portions of their facility at Whiting Hill are no longer tax-exempt because the spaces are occupied by employees for third party vendors, including private practice oncologists and lab personnel.

But Northern Light says the workers provide services exclusively for the nonprofit health care system and its patients.

Northern Light says it would have to pay nearly half a million dollars in taxes and filed a complaint Friday in Superior Court seeking a declaratory judgment. The city of Brewer was not immediately available for comment.

https://www.mainepublic.org/health/2023-08-25/northern-light-health-challenges-brewer-over-loss-of-tax-exempt-status-for-portions-of-its-facilities 

 

 

 

 

Health Care Reform Articles - August 20, 2023

How Do We Fix the
Scandal That Is American
Health Care?

by Nicholas Kristof - NYT - August 17 2023

It’s not just that life expectancy in Mississippi (71.9) now appears to be a hair shorter than in Bangladesh (72.4). Nor that an infant is some 70 percent more likely to die in the United States than in other wealthy countries.

Nor even that for the first time in probably a century, the likelihood that an American child will live to the age of 20 has dropped.

All that is tragic and infuriating, but to me the most heart-rending symbol of America’s failure in health care is the avoidable amputations that result from poorly managed diabetes.

A medical setting cannot hide the violence of a saw cutting through a leg or muffle the grating noise it makes as it hacks through the tibia or disguise the distinctive charred odor of cauterized blood vessels. That noise of a saw on bone is a rebuke to an American health care system that, as Walter Cronkite reportedly observed, is neither healthy, caring nor a system.

Dr. Raymond Girnys, a surgeon who has amputated countless limbs here in the Mississippi Delta, one of the poorest and least healthy parts of America, told me that he has nightmares of “being chased by amputated legs and toes.”

“It starts from the bottom up,” Dr. Girnys said, explaining how patients arrive with diabetic wounds on the foot that refuse to heal in part because of diminished circulation when blood sugar is not meticulously managed in a person with diabetes. Dr. Girnys initially tries to clean and treat the lesions, but they grow deeper, until he has to remove a toe.

When more wounds develop, he takes off the foot in the hope of saving the rest of the leg. New wounds can force him to amputate the leg below the knee and perhaps, finally, above the knee. After that, Dr. Girnys said, the patient is likely to die within five years.

A toe, foot or leg is cut off by a doctor about 150,000 times a year in America, making the United States a world leader of these amputations.

I’ll be blunt: America’s dismal health care outcomes are a disgrace. They shame us. Partly because of diabetes and other preventable conditions, Americans suffer unnecessarily and often die young. It is unconscionable that newborns in India, Rwanda and Venezuela have a longer life expectancy than Native Americans newborns (65) in the United States. And Native American males have a life expectancy of just 61.5 years — shorter than the overall life expectancy in Haiti.

But there are fixes, and three in particular would make a huge difference: expanding access to medical care; more aggressively addressing behaviors like smoking, overeating and drug abuse; and making larger society-wide steps to boost education and reduce child poverty. One reason to believe that we can do better on health care outcomes is that much of the rest of the world already does.

This is the third essay in my series about how we can better help the millions of Americans left behind. We in journalism mostly cover problems: We typically write about planes that crash, not planes that land. But this series aims to offer solutions to challenges our nation faces.

A Superpower Where Many Citizens Die Young

A starting point is to avoid the myopia of Russia when it experienced a drop in life expectancy beginning in the 1980s and a rise in “deaths of despair.” Leaders took comfort in Russia’s status as a military superpower and a standout in the sciences and performing arts; they blamed individuals’ lack of personal responsibility for the deaths. They didn’t understand that when so many people are sick and struggling, the ailment is deeper than individual weakness.

Americans sometimes blithely boast of the best medical care in the world, and there is some truth to that. I have a friend who is alive today because of the success of immunotherapy to fight stage IV cancer.

Our health technology and cutting-edge medicine is superb. Yet whatever the quantity and quality of our bone saws, the tragedy is that they are so often needed.

America’s health crisis is most evident among low-education and low-income Americans, notably people of color and particularly men.

“The poorest men in the U.S. have life expectancies comparable to men in Sudan and Pakistan; the richest men in the U.S. live longer than the average man in any country,” researchers with the Opportunity Insights team at Harvard concluded. But while the gaps we focus on have to do with mortality, there are also enormous gaps in quality of life.

“It’s very rare that I’ve got somebody in that has just one health problem, or in for a wellness visit,” said Yvonne Tanner, a nurse practitioner in the Mississippi Delta town of Itta Bena, with a population that is largely poor and Black. “Everybody that I see is already very, very sick.” Most have multiple diagnoses, she said, of hypertension, diabetes, arthritis and more.

Tanner choked up and her eyes welled as she told me of a patient she had just seen, a 47-year-old woman with poorly managed diabetes whose legs were severely swollen. The woman didn’t know why; Tanner did. It was end-stage kidney failure.

That patient, who has teenage children, has a job, but it’s not clear how she can keep it while getting three sessions of dialysis each week.

Type II diabetes, the kind that is linked to diet and inactivity, used to be called adult-onset diabetes but now affects children as well — and it encapsulates American ill health. It reflects the brilliance of soda companies and fast-food companies at marketing their products — in ways that are good for corporate profits but disastrous for American health. Type II diabetes often strikes the poor and marginalized who live chaotic lives without insurance, seek cheap calories in food deserts and struggle to manage budgets and insulin levels. The upshot is often dialysis, amputations and disability.

Statisticians have tried to calculate what they call “healthy life expectancy” in a population — the number of years an average person in a country can live a normal life, before amputations, dialysis, blindness or other setbacks. In the United States, that is just 66.1 years, shorter than in Turkey, Sri Lanka, Peru, Thailand and other countries that are much poorer. My dad was an Armenian refugee who fled Romania and was thrilled to settle in America; now Armenia and Romania both have longer healthy life expectancy than the United States.

One Step Forward: Expand Access to Care

Here’s a simple step to improve access to health care: Expand Medicaid.

Ten states, including Mississippi, still have not done so even though nearly all the funds would come from the federal government. Partly as a result, some hospitals are cutting back services in Mississippi and are at risk of closing.

A cartoon in Mississippi Today recently showed a patient asking a doctor, “How long do I have, doc?” The physician replies: “Longer than this hospital.”

Even much poorer countries manage to provide universal health care. I visited hospitals recently in the West African nation of Sierra Leone, which mostly provides free prenatal care without any complicated bureaucracy, so 98 percent of women get some prenatal care — which appears to be a hair higher than in Florida. Granted, Florida medicine is far more sophisticated than that in Sierra Leone, but that may not matter for those outside the health care system.

Dr. Kim Sanford, an ob-gyn in the Mississippi Delta, told me about a 74-year-old woman who came in recently to have an IUD removed. She had had it inserted after her daughter was born 46 years ago and hadn’t seen a gynecologist since.

Some 28 million Americans lack medical insurance. An even larger number of Americans — 77 million — lack dental coverage.

Cost is often the argument against expanding access to health care. But it’s hard to understand how just every other advanced country can afford universal care and the United States can’t. And consider that 94 percent of Americans with substance-use disorder do not get treatment, even though this pays for itself many times over. Our policy often seems driven less by cost considerations than by indifference, even cruelty.

Improving access to health care can also take other forms, such as improving outreach and increasing diversity in the ranks of health workers. Researchers have found, for example, that Black patients have better outcomes with Black doctors.

Those of us on the left have mostly been fighting to increase health care coverage, and that’s important. But outcomes are driven not just by access or socioeconomic status. Hispanics lack health insurance at high rates, yet have a longer life expectancy than white Americans and often a lower maternal mortality rate.

Part of the explanation for this “Hispanic paradox” may be strong families, community support systems and healthy behaviors. Raj Chetty, a Harvard economist, has found that behaviors — such as smoking, eating habits and exercise — affect life expectancy even more than access to health care.

One crucial fix, in short, is to influence health behaviors. This is difficult but not impossible. Just since 2005, the share of American adults who smoke has dropped by almost half. And America’s teenage birthrate has plummeted by an astonishing 77 percent since 1991, partly because of comprehensive sex education and increased access to long-acting contraceptives.

One step that might reduce consumption of sugary snacks is a soda tax, modeled on the cigarette tax. Such taxes are regressive but seem effective at reducing consumption of harmful products.

More fundamentally, though, self-harming behaviors arise from a context. The genesis for this series was a crisis in behavioral health in my hometown in rural Oregon, where more than one-quarter of the children on my old No. 6 school bus are now dead from drugs, alcohol and suicide. Looking back, the central problem was the same as in many working-class communities across the country: the loss of good union jobs followed by despair and loneliness — and the arrival of meth and opioids.

It was poverty, but a poverty of purpose as well as of the wallet. It was a hopelessness that sabotaged marriages and sapped self-esteem and self-care. In talking to doctors and nurses over the years, I’ve been struck by how often they mentioned that men are reluctant to get preventive care or treatment. They say that when men do come in, it’s often because they’re nudged by their wives — but as the institution of marriage has crumbled in working-class America, there often aren’t wives to save their husbands’ lives.

Researchers tried to calculate how many people poverty kills each year in the United States, and their estimate was 183,000 — many times the number of homicides annually.

Dr. Thomas Dobbs, the dean of the school of population health at the University of Mississippi, wrestles daily with health consequences of inequality, including syphilis that is now spreading rapidly. I asked Dr. Dobbs what he would most like to do to improve health outcomes, and I assumed he would name some medical interventions.

“Desegregate schools and fix criminal justice,” he said. “That’s what I would do.”

The point is that America’s health dysfunction is rooted in a broader national dysfunction, including deep intergenerational poverty and despair. The medical system can efficiently amputate a foot, but an improvement in self-care of diabetes sometimes requires an injection of hope and improvements in education, job training, earnings and opportunity.

This is important because in America our problem is not just that people die in their 70s rather than their 80s. Dr. Steven H. Woolf of the Virginia Commonwealth University School of Medicine has found that because of guns, suicides and accidental deaths, child mortality in the United States is rising rather than falling — in a way that he doesn’t believe has any precedent in the past 100 years.

As a result, notes John Burn-Murdoch of The Financial Times, in any class of 25 American kindergartners, one child on average will die by middle age.

Dr. Yasmin Cheema, a pediatrician in the town of Clarksdale in the Delta, told me of the obesity and diabetes she sees even in children. A 10-year-old boy recently fainted in her waiting room; it turned out that he was in shock with undiagnosed diabetes. Dr. Cheema called 911.

After telling me the story, Dr. Cheema stepped into the next room to do a physical on a 14-year-old boy. He weighed 295 pounds.

A Model in the Mississippi Delta

One model effort to reach young people and address behaviors in the Mississippi Delta is the Delta Health Alliance. It has helped build a wellness center in the town of Leland, with a gym, yoga classes and an on-site nutritionist who teaches how to cook healthy meals.

The Delta Health Alliance tries more broadly to address the “social determinants of health” that sometimes lead to obesity, smoking and poor health outcomes. This means supporting education beginning with pre-K, promoting mentoring, organizing job training and much more.

“We realized we could help a lot of 50- or 60-year-old diabetics, but that’s not fixing the problem, the generational poverty problem that starts when kids are born,” said Karen Matthews, president of the Delta Health Alliance.

The alliance tracks metrics closely, and its approach seems to be reducing poverty and improving health outcomes. It’s as essential an investment in health as CT scanners.

More broadly, we know how to cut child poverty, because we’ve done it: The United States cut it by almost half in 2021, largely with the refundable child tax credit. But Congress allowed the program to lapse, and child poverty is rising again.

Some may scoff that short life spans are a result of personal irresponsibility, such as eating too many sugary snacks, exercising too little or abusing alcohol. It’s true that personal choices shape our health, but so do our collective choices about expanding Medicaid, extending the child tax credit, providing adequate drug treatment and educating people about health choices. If we believe in personal responsibility for others, we should accept collective responsibility for ourselves.

It would have been unimaginable even a decade ago that Bangladesh could overtake an American state in life expectancy. That is a reflection of our choices, personal and collective, and we can do better.

https://www.nytimes.com/2023/08/16/opinion/health-care-life-expectancy-poverty.html?smid=nytcore-ios-share&referringSource=articleShare

‘The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions

by Reed Abelson and Margot Sanger-Katz

By next year, half of Medicare beneficiaries will have a private Medicare Advantage plan. Most large insurers in the program have been accused in court of fraud.

The health system Kaiser Permanente called doctors in during lunch and after work and urged them to add additional illnesses to the medical records of patients they hadn’t seen in weeks. Doctors who found enough new diagnoses could earn bottles of Champagne, or a bonus in their paycheck.

Anthem, a large insurer now called Elevance Health, paid more to doctors who said their patients were sicker. And executives at UnitedHealth Group, the country’s largest insurer, told their workers to mine old medical records for more illnesses — and when they couldn’t find enough, sent them back to try again.

Each of the strategies — which were described by the Justice Department in lawsuits against the companies — led to diagnoses of serious diseases that might have never existed. But the diagnoses had a lucrative side effect: They let the insurers collect more money from the federal government’s Medicare Advantage program.

Medicare Advantage, a private-sector alternative to traditional Medicare, was designed by Congress two decades ago to encourage health insurers to find innovative ways to provide better care at lower cost. If trends hold, by next year, more than half of Medicare recipients will be in a private plan.

But a New York Times review of dozens of fraud lawsuits, inspector general audits and investigations by watchdogs shows how major health insurers exploited the program to inflate their profits by billions of dollars.

The government pays Medicare Advantage insurers a set amount for each person who enrolls, with higher rates for sicker patients. And the insurers, among the largest and most prosperous American companies, have developed elaborate systems to make their patients appear as sick as possible, often without providing additional treatment, according to the lawsuits.

As a result, a program devised to help lower health care spending has instead become substantially more costly than the traditional government program it was meant to improve.

Eight of the 10 biggest Medicare Advantage insurers — representing more than two-thirds of the market — have submitted inflated bills, according to the federal audits. And four of the five largest players — UnitedHealth, Humana, Elevance and Kaiser — have faced federal lawsuits alleging that efforts to overdiagnose their customers crossed the line into fraud.

The fifth company, CVS Health, which owns Aetna, told investors its practices were being investigated by the Department of Justice.

In statements, most of the insurers disputed the allegations in the lawsuits and said the federal audits were flawed. They said their aim in documenting more conditions was to improve care by accurately describing their patients’ health.

Many of the accusations reflect missing documentation rather than any willful attempt to inflate diagnoses, said Mark Hamelburg, an executive at AHIP, an industry trade group. “Professionals can look at the same medical record in different ways,” he said.

The government now spends nearly as much on Medicare Advantage’s 29 million beneficiaries as on the Army and Navy combined. It’s enough money that even a small increase in the average patient’s bill adds up: The additional diagnoses led to $12 billion in overpayments in 2020, according to an estimate from the group that advises Medicare on payment policies — enough to cover hearing and vision care for every American over 65.

Another estimate, from a former top government health official, suggested the overpayments in 2020 were double that, more than $25 billion.

The increased privatization has come as Medicare’s finances have been strained by the aging of baby boomers. But for insurers that already dominate health care for workers, the program is strikingly lucrative: A study from the Kaiser Family Foundation, a research group unaffiliated with the insurer Kaiser, found the companies typically earn twice as much gross profit from their Medicare Advantage plans as from other types of insurance.

For people choosing between traditional Medicare and Medicare Advantage, there are trade-offs. Medicare Advantage plans can limit patients’ choice of doctors, and sometimes require jumping through more hoops before getting certain types of expensive care.

But they often have lower premiums or perks like dental benefits — extras that draw beneficiaries to the programs. The more the plans are overpaid by Medicare, the more generous to customers they can afford to be.

“Medicare Advantage is an important option for America’s seniors, but as Medicare Advantage adds more patients and spends billions of dollars of taxpayer money, aggressive oversight is needed,” said Senator Charles Grassley of Iowa, who has investigated the industry. The efforts to make patients look sicker and other abuses of the program have “resulted in billions of dollars in improper payments,” he said.

Many of the fraud lawsuits were initially brought by former employees under a federal whistle-blower law that allows them to get a percentage of any money repaid to the government if their suits prevail. But most have been joined by the Justice Department, a step the government takes only if it believes the fraud allegations have merit. Last year, the department’s civil division listed Medicare Advantage as one of its top areas of fraud recovery.

“It’s an extremely high priority for us,” said Michael Granston, a deputy assistant attorney general for the civil division.

In contrast, regulators overseeing the plans at the Centers for Medicare and Medicaid Services, or C.M.S., have been less aggressive, even as the overpayments have been described in inspector general investigations, academic research, Government Accountability Office studies, MedPAC reports and numerous news articles, over the course of four presidential administrations.

Congress gave the agency the power to reduce the insurers’ rates in response to evidence of systematic overbilling, but C.M.S. has never chosen to do so. A regulation proposed in the Trump administration to force the plans to refund the government for more of the incorrect payments has not been finalized four years later. Several top officials have swapped jobs between the industry and the agency.

C.M.S. officials declined interview requests. In a statement, the C.M.S. administrator, Chiquita Brooks-LaSure, said the agency recently sought feedback on how to improve the program. “We are committed to making sure that Medicare dollars are used efficiently and effectively in Medicare Advantage,” she said.

The popularity of Medicare Advantage plans has helped them avoid legislative reforms. The plans have become popular in urban areas, and have been increasingly embraced by Democrats as well as Republicans. Nearly 80 percent of U.S. House members signed a letter this year saying they were “ready to protect the program from policies that would undermine” its stability.

“You have a powerful insurance lobby, and their lobbyists have built strong support for this in Congress,” said Representative Lloyd Doggett, a Texas Democrat who chairs the House Ways and Means Health subcommittee.

Some critics say the lack of oversight has encouraged the industry to compete over who can most effectively game the system rather than who can provide the best care.

“Even when they’re playing the game legally, we are lining the pockets of very wealthy corporations that are not improving patient care,” said Dr. Donald Berwick, a C.M.S. administrator under the Obama administration, who recently published a series of blog posts on the industry. “When you skate to the edge of the ice, sometimes you’re going to fall in.”

The program’s promise

Congress’s first attempt to design a privatized Medicare plan paid insurers the same amount for every patient with similar demographic characteristics.

In theory, if the insurers could do better than traditional Medicare — by better managing patients’ care, or otherwise improving their health — their patients would cost less and the insurers would make more money.

But some insurers engaged in strategies — like locating their enrollment offices upstairs, or offering gym memberships — to entice only the healthiest seniors, who would require less care, to join. To deter such tactics, Congress decided to pay more for sicker patients.

Almost immediately, companies saw ways to exploit that system. The traditional Medicare program provided no financial incentive to doctors to document every diagnosis, so many records were incomplete. Under the new program, insurers began rigorously documenting all of a patient’s health conditions — say depression, or a long-ago stroke — even when they had nothing to do with the patient’s current medical care.

In one early case, a Florida medical practice was accused of falsifying diagnoses to enrich its owner and Humana. When Humana told the doctor who owned the practice that his Medicare risk adjustment, or M.R.A., scores had increased significantly, he responded by email, according to the whistle-blower lawsuit: “Good, I am trying to buy that house based on M.R.A. scores.” The case was settled for more than $3 million.

The doctor denied any wrongdoing. Humana declined to comment on the lawsuit and said it takes compliance “seriously.” The company recently told investors it had been questioned by the Justice Department about its billing practices and expected additional litigation.

At conferences, companies pitched digital services to analyze insurers’ medical records and suggest additional codes. Such consultants were often paid on commission; the more money the analysis turned up, the more the companies kept.

The insurers also began hiring agencies that sent doctors or nurses to patients’ homes, where they could diagnose them with more diseases.

One company, Mobile Medical Examination Services, worked with Anthem and Molina, among others. Its doctors and nurses were pushed to document a range of diagnoses, including some — vertebral fractures, pneumonia and cancer — they lacked the equipment to detect, according to a whistle-blower lawsuit. According to the lawsuit, employees who drew patients’ blood often were not provided with a centrifuge or cooler; spoiled blood analyzed a day later produced strange results that could be used to justify valuable diagnoses, including kidney disease and leukemia. The company was acquired by Quest Diagnostics after the case was settled for an undisclosed amount in 2016; Quest said the company complies with all federal and state laws and regulations.

Cigna hired firms to perform similar at-home assessments that generated billions in extra payments, according to a 2017 whistle-blower lawsuit, which was recently joined by the Justice Department. The firms told nurses to document new diagnoses without adjusting medications, treating patients or sending them to a specialist.

According to the lawsuit, some patients were diagnosed with cancer and heart disease. Nurses were told to especially look for patients with a history of diabetes because it was not “curable,” even if the patient now had normal lab findings or had undergone surgery to treat the condition.

The company declined to comment. “We will vigorously defend our Medicare Advantage business against these allegations,” Cigna said in an earlier statement regarding the lawsuit.

Adding the code for a single diagnosis could yield a substantial payoff. In a 2020 lawsuit, the government said Anthem instructed programmers to scour patient charts for “revenue-generating” codes. One patient was diagnosed with bipolar disorder, although no other doctor reported the condition, and Anthem received an additional $2,693.27, the lawsuit said. Another patient was said to have been coded for “active lung cancer,” despite no evidence of the disease in other records; Anthem was paid an additional $7,080.74. The case is continuing.

The most common allegation against the companies was that they did not correct potentially invalid diagnoses after becoming aware of them. At Anthem, for example, the Justice Department said “thousands” of inaccurate diagnoses were not deleted. According to the lawsuit, a finance executive calculated that eliminating the inaccurate diagnoses would reduce the company’s 2017 earnings from reviewing medical charts by $86 million, or 72 percent.

In a statement, the company, now named Elevance, said it would “vigorously defend our Medicare risk adjustment practices” and accused the government of holding it to standards “that are not grounded in formal statutory and regulatory rules.”

Some of the companies took steps to ensure the extra diagnoses didn’t lead to expensive care. In an October 2021 lawsuit, the Justice Department estimated that Kaiser earned $1 billion between 2009 and 2018 from additional diagnoses, including roughly 100,000 findings of aortic atherosclerosis, or hardening of the arteries. But the plan stopped automatically enrolling those patients in a heart attack prevention program because doctors would be forced to follow up on too many people, the lawsuit said.

Kaiser, which both runs a health plan and provides medical care, is often seen as a model system. But its control over providers gave it additional leverage to demand additional diagnoses from the doctors themselves, according to the lawsuit.

“The cash monster was insatiable,” said Dr. James Taylor, a former coding expert at Kaiser who is one of 10 whistle-blowers to accuse the organization of fraud.

At meetings with supervisors, he was instructed to find additional conditions worth tens of millions of dollars. “It was an actual agenda item and how could we get this,” Dr. Taylor said.

Marc T. Brown, a Kaiser spokesman, said in a statement, “We are confident in our compliance with Medicare Advantage risk-adjustment program requirements,” and added, “Our policies and practices represent well-reasoned and good-faith interpretations of sometimes vague and incomplete guidance from C.M.S.”

Last year, the inspector general’s office noted that one company “stood out” for collecting 40 percent of all Medicare Advantage’s payments from chart reviews and home assessments despite serving only 22 percent of the program’s beneficiaries. It recommended Medicare pay extra attention to the company, which it did not name, but the enrollment figure matched UnitedHealth’s.

A civil trial accusing UnitedHealth of fraudulent overbilling is scheduled for next year. The company’s internal audits found numerous mistakes, according to the lawsuit, which was joined by the Justice Department. Some doctors diagnosed problems like drug and alcohol dependence or severe malnutrition at three times the national rate. But UnitedHealth declined to investigate those patterns, according to the suit.

Matthew Wiggin, a spokesman for the company, called the inspector general’s report “misleading.” He said the company uses diagnostic coding to improve patient care, and noted that the whistle-blower in the lawsuit had not worked for the company in nearly a decade. “Our chart review process complies with regulatory standards,” he said, adding, “Our robust compliance program also proactively seeks to identify fraud, waste and abuse in the system.”

The company countered by suing Medicare, arguing that it wasn’t required to fix inaccurate records before regulations changed in 2014. It won at first, then lost on appeal. In June, the Supreme Court declined to hear the case.

Inaction at Medicare

Even before the first lawsuits were filed, regulators and government watchdogs could see the number of profitable diagnoses escalating. But Medicare has done little to tamp down overcharging.

Several experts, including Medicare’s advisory commission, have recommended reducing all the plans’ payments. Congress has ordered several rounds of cuts and gave C.M.S. the power to make additional reductions if the plans continued to overbill. The agency has not exercised that power.

The agency does periodically audit insurers by looking at a few hundred of their customers’ cases. But insurers are fined for billing mistakes found only in those specific patients. A rule proposed during the Trump administration to extrapolate the fines to the rest of the plan’s customers has not been finalized.

Some of the agency’s top leaders have had close ties to industry. Marilyn Tavenner, a former C.M.S. administrator, left in 2015, then ran the main trade group for health insurers; she was replaced by Andy Slavitt, a former executive at UnitedHealth. Jonathan Blum, the agency’s current chief operating officer, worked for an insurer after leaving the agency in 2014, then became an industry consultant, before returning to Medicare last year.

Ted Doolittle, who served as a senior official for the agency’s Center for Program Integrity from 2011 to 2014, said officials at Medicare seemed uninterested in confronting the industry over these practices. “It was clear that there was some resistance coming from inside” the agency, he said. “There was foot dragging.”

There are signs the problem is continuing.

“We are hearing about it more and more,” said Jacqualine Reid, a government research analyst at the Office of Inspector General who has analyzed Medicare Advantage overbilling.

.https://www.nytimes.com/2022/10/08/upshot/medicare-advantage-fraud-allegations.html?smid=nytcore-ios-share&referringSource=articleShare

 

Commentary: On anniversary of their founding, we must recognize value of Medicare, Medicaid

by Eric Steele - Portland Sunday Telegram - July 30, 2023

About 50% of Mainers benefit from these programs, but we still have far to go to improve our health as a nation, including improvements in life expectancy, preventable hospitalizations and infant mortality. 

On July 30, 1965, President Lyndon B. Johnson signed the Medicare and Medicaid Act, also known as the Social Security Amendments of 1965, into law. It established Medicare, a health insurance program for the elderly and disabled funded through a payroll tax, and Medicaid, a health insurance program for people with limited income, particularly women and children, funded jointly by the federal and state governments (Medicaid is called MaineCare in our state). For 58 years, these programs have been protecting the health and well-being of thousands of Mainers, saving lives, preventing illness and improving the economic security of Maine families. As of 2023, approximately 340,000 Maine seniors are enrolled in Medicare and about 400,000 Maine residents are receiving Medicaid benefits. This means that about 50% of Maine people benefit from these two programs.

As the U.S. Centers for Disease Control and Prevention states: “Public health is the science of protecting and improving the health of people and their communities. Overall, public health is concerned with protecting the health of entire populations.” Access to health care is at the core of this definition and we can celebrate what Medicare and Medicaid have achieved as public health victories.

On this anniversary, it is important that we recognize the value of these public programs, which give life-saving services to so many vulnerable people. The benefits have been well documented for Medicaid. Research at the national level has shown that Medicaid expansion in states that chose to do that under the Affordable Care Act saved 19,000 lives, while the decision in other states to not expand led to 15,000 premature deaths (Center for Budget and Policy Priorities, November 2019; study based on 2014-2017 data). This data is compelling, and our governor made the prudent decision to expand MaineCare in 2019 because it improved access to health care in Maine for thousands and generated federal money to support increased access. Many lives were saved in our state, and our experience with the Medicaid expansion opportunity under the ACA is one demonstration of the pivotal nature of access to health care for the health of the entire community.

Unfortunately, though Maine has been a real leader in helping people to get access to health care, there are still too many of our neighbors who have no access or very limited access. Too many people are dying, becoming disabled or being driven into bankruptcy because of our failure as a nation to have a health care system that is accessible to all. In addition, physicians are struggling with the many inefficiencies that characterize the administration of our current health care system.

Despite the benefits afforded by Medicare and Medicaid, we still have work to do to improve our overall health as a nation, including improvements in life expectancy, preventable hospitalizations, infant mortality and reducing costs. The Maine Medical Association Annual Session in September will focus on opportunities to change the health care system to serve all people in a way that will make us proud. We also expect to release at that time our revised policy statement on the need for health care reform as well as our expectations of how our health care system should support patients and clinicians alike. We must do more, and we believe doing more is both possible and essential.

Finally, Medicare and Medicaid are not perfect programs – they both have flaws that are deeply frustrating for patients and clinicians alike. But the MMA feels strongly that the focus should be on fixing the flaws while preserving these life-saving programs that have done so much for so many. We celebrate their creation on July 30.

  https://www.pressherald.com/2023/07/30/maine-voices-on-anniversary-of-their-founding-we-must-recognize-value-of-medicare-medicaid/

Why are the highest-paid U.S. doctors in the Dakotas?

by Andrew Van Dam - Washington Post - August 11, 2023

While conducting last week’s hull-bustingly deep dive on doctor pay — in which we revealed that doctors earn more than any other major American profession — we noticed a weird subplot. And it involves one of our favorite topics: lawyers.

We already knew that the highest-earning lawyers, like other elite white-collar professionals, live in high-cost, high-income metropoli such as New York and D.C. But here’s the weird part: That’s not true of doctors. They earn the most in rural states.

The best-paid doctors in America work in the Dakotas, where they averaged $524,000 (South) and $468,000 (North) in 2017 in their prime earning years, including business income and capital gains. That’s well above the already astonishing $405,000 the average U.S. doctor made in the prime earning years, defined here as 40 to 55.

And it’s way above the $288,000 we estimate was earned by lawyers in that age group. Prime-earning-age attorneys in South Dakota made $165,000 in 2017, while their neighbors to the north made $183,000.

By contrast, lawyers in New York earned an average of $438,000, which is roughly comparable to the $447,000 earned by the average New York doctor. Their D.C. lawyer friends made $406,000, while the average D.C. doctor eked out just $349,000. This makes our nation’s capital one of only two places in the nation where lawyers out-earn doctors. (The other is Delaware, our nation’s corporate capital.)

Overall, the average U.S. lawyer can expect about $7.1 million in lifetime income, a bit higher than a primary-care doctor ($6.5 million) but well behind the broader physician average of $10 million, according to a sophisticated analysis of about 2 million tax records from lawyers and more than 10 million tax records from doctors.

That analysis appears in a recent working paper by economists Maria Polyakova of Stanford University, Joshua Gottlieb of the University of Chicago, Kevin Rinz and Victoria Udalova of the Census Bureau and Hugh Shiplett of the University of New Brunswick. The project is one of the first major results from a health-data-focused Census Bureau effort to link sprawling government data sets (while, of course, following stringent standards regarding confidentiality and privacy).

The more-limited lawyer data doesn’t allow for the same in-depth analysis we did for doctors: It includes far fewer records, and the definitions aren’t as clean. For example, while attorneys predominate, we aren’t able to sort out judges, magistrates, clerks and other judicial workers.

But it does offer a useful tool for highlighting the supremely weird geographic distribution of physician income, which defies expectations across the board.

Rural regions rule the doctor rankings: Alaska, Wyoming and Nebraska join the Dakotas in the top five states for physician pay, confounding the intuition hammered into our souls by more than a decade of covering economics. None of those are high-earning states overall, with the evergreen exception of Alaska. They’re also not high-cost: North and South Dakota rank 41st and 45th, respectively, in cost of living among the states and D.C.; only Alaska costs more than average, according to the Bureau of Economic Analysis.

They’re also exactly the sort of rural areas where you’d expect to find lower-paid primary care doctors, not high-earning specialists. But the economists found that, after accounting for training and experience, doctors of all stripes in low-income areas out-earn their peers in high-income ones.

That’s, uh, unusual. If it happened with other careers, low-income areas would — by definition — no longer be low-income areas!

“For lawyers, there is a strong relationship between the lawyer’s income and incomes of other people in the area. And that’s not true for doctors,” Gottlieb said, noting that doctor pay doesn’t have a strong relationship with local education levels and real estate prices, either.

So why is the geography of doctor pay so mind-blowingly inside-out?

We went to the phones. And, at first, most economists we called gave the same answer: competition.

Rural America has about 20 percent of the U.S. population but about 10 percent of its doctors, according to our analysis of Census Bureau data. So the talented young physicians willing to hang their shingles in North Dakota don’t have to worry about rivals undercutting their prices. They can charge more for everything, from appendectomies to vasectomies.

Competition could also show up in disguise: You may have to pay doctors more to lure them away from the big cities. Say what you will about big skies and fresh air; many educated young professionals making $405,000 a year can find more fun ways to spend that money in New York’s Manhattan than in Manhattan, Kan.

Not all doctors think that way, of course. And anyway, Gottlieb said, the normal laws of economics don’t always apply in health care, “a fascinating labor market where the government is playing a huge role.”

Take the country’s lopsided system of medical residencies. Residencies tend to be in well-established urban areas, in part because federal residency funding was essentially frozen in 1997 and ignores a quarter-century of population growth. Also because elite medical colleges stubbornly insist on staying put in the Northeast, and because it takes a hefty population to produce enough patients to provide the variety of ailments needed to fuel a teaching hospital.

The distribution of residencies helps determine the distribution of doctors, since most residents (54 percent) stay in-state for their careers, according to the Association of American Medical Colleges. So the lack of rural residencies has accelerated the rural doctor shortage.

The government also influences physician pay directly through Medicare, perhaps the biggest spigot of health-care cash on Planet Earth. Typically, people in low-income areas can’t spend as much and merchants tend to earn less. But that’s not the case for health care, in large part because Medicare ensures that retirement-age Americans — by far the biggest health-care consumers — can afford about as much in South Dakota as they can in South Beach. Which means doctors work in one of the few industries where demand is not necessarily determined by disposable income.

“Consumers’ purchasing power depends on their incomes. But here we break that link by providing subsidies specifically for purchasing medical care,” Gottlieb told us.

But Medicare plays an even more explicit role in fostering this geographic pay-gap anomaly. A stellar 2022 report from the nonpartisan Government Accountability Office lays out the astonishing design choices that have caused Medicare calculations for doctor pay to be remarkably flat from state to state.

Doctor pay is one of three elements (along with the costs of running a practice and of malpractice insurance) the Centers for Medicare and Medicaid Services use to calculate how much Medicare should reimburse in a given area. To calculate local doctor pay, CMS takes careful Bureau of Labor Statistics measurements of how much other local professionals earn and compares them with the national average for those professions.

Then — and you are not hallucinating here — CMS takes that carefully derived number and divides it by an arbitrary factor of four.

So if architects, engineers, computer scientists and attorneys earned 20 percent less than the national average in Idaho, then the government would take that 20 percent, divide it by four and set the physician-compensation component of their reimbursement formula at 5 percent less than the national average. Which helps explain why doctors in Boise might do pretty well for themselves compared with their neighbors at the local law firm.

Why does CMS do this? Because when the system was introduced in 1989, policymakers were troubled by the idea of large variations in doctor pay, according to a 2004 Urban Institute report. The normal economic calculations, they concluded, produced a “degree of geographic variation in physician work costs [that] appeared to be too large.”

And that arbitrary bit of division isn’t the end of it. In many years — including the current one, as well as the years we used for pay data — Congress has taken all the places with below-average adjustments and boosted them up to the national average. So instead of making 5 percent less, the Idaho doctors in our example should make zero percent less. (The Affordable Care Act made this zero-percent minimum permanent in the most rural states, which include the Dakotas. Alaska gets a special minimum of 50 percent above average.)

Doctors in high-paying states see the same adjustment in reverse. If local professionals make 20 percent more, the doctor-pay formula component would be just 5 percent higher. The goal of this exercise seems to be attracting physicians to rural areas. But the effect is that mighty Medicare expects physicians in Bismarck to earn nearly as much as their peers in Boston.

“Medicare adjustment rates certainly affect geographic patterns” in doctor earnings, Polyakova said. And if those adjustments were more closely related to local prices or median incomes, then geographic differences in physician incomes would look more like those of lawyers.

 

“If the reality is that you do have to pay a physician more to work in Rapid City or somewhere in Idaho, we still want Medicare patients in those markets to receive high-quality care,” said Christopher Whaley, a health care economist at the Rand Corp. and Brown University who has analyzed the factors influencing physician pay.

“And maybe that’s just the reality of operating a nationwide health-care system,” Whaley said: “In some areas, you have to pay more.”

https://www.washingtonpost.com/business/2023/08/11/doctor-pay-geography/