The Covert Rationing Blog

Why Big Health Insurance Supports the Democrats

May 30th, 2008 by DrRich

As difficult as it undoubtedly will be for most readers to believe, DrRich still hears from skeptics who ridicule his theory that a Democratic victory this fall will be the best thing that could happen to the health insurance industry. For example, consider this from Anonymous in Montana:

Democrats hate ALL corporations and want to eliminate profit as a concept. Democrats believe that the most evil companies in all the evil corporate world are the murderous health insurance outfits, because they make their filthy profits withholding healthcare from the sick. If the Democrats win this fall the health insurance industry is toast. For you to suggest that the health insurance industry will be better off with a Democratic victory is nonsense. And suggesting that the insurance industry will support the Democratic candidate is dumber than suggesting that Smith & Wesson will be a big Obama booster. You twit.

DrRich has not given much thought to which candidate the armaments industry will be supporting this year. He expects it will be Mr. McCain, who once operated some pretty impressive firepower himself. On the other hand, one could easily predict a huge boost in gun sales if Mr. Obama wins, triggered by concern (among those Bible-thumping, gun-toting non-supporters) over the possible repeal of the 2nd amendment. So, Smith & Wesson’s support could go either way. DrRich will have to consider the matter further.

But, my dear Anonymous, in regard to which candidates the health insurance industry will be supporting this year, the verdict is already in.

The Wall Street Journal Health Blog reported this week that the health industry has suddenly shifted from a preference for Republicans to a preference for Democrats. Specifically, political contributions from the health sector are showing a 55% to 45% split in favor of Democrats. This is a reversal of the traditional split that for at least 20 years has strongly favored Republicans.

Furthermore, a visit to the website of the Center for Responsive Politics, which tracks these sorts of data, will show that political contributions from HMOs (i.e., the big insurers) has trended even more strongly in favor of Democrats: 69% for Democratic candidates, and only 31% for Republicans. This is a Hillary-in-West-Virginia-magnitude rout.

Non-readers of this blog (and, of course, Anonymous) will be surprised by these statistics. After all, both Mr. Obama and Ms. Clinton propose to phase-out private health insurers (though they won’t come right out and say so) by attrition, by forcing them to compete for subscribers with a new government-sponsored, taxpayer-subsidized “Medicare for Everyone” health plan. Mr. McCain, on the other hand, proposes to maintain private health insurance as the backbone of the American healthcare system, relying nearly entirely on this industry as the engine for healthcare reform. So why would HMOs be giving financial aid to Obama/Clinton and not to McCain?

DrRich’s theory, first formulated six months ago, provides the answer. In the evolution of their managed care products, health insurers finally have reached the point where they need to demonstrate their ability to grow their profits by actually managing the medical care of sick people. The notion that they can do so is, of course, absurd. Furthermore, the notion that the Republicans would be relying on the insurers not only to make a profit, but also to reduce the cost of American healthcare at the same time, literally scares the bejeebers out of insurance executives. The very last thing Wellpoint and UnitedHealth Group want is for McCain to win the presidency, then turn to them and say, “OK boys, do your cost-reducing stuff!” A Republican victory would suddenly reveal the insurers to be entirely bankrupt of useful ideas, and would expose them to a sudden, ugly, stock-tanking demise.

Democrats, of course, will also bring about the demise of the private health insurance industry, just as Anonymous asserts. But at least they will have the grace to do it gradually and predictably - and with one last profit-inducing, stock-soaring windfall thrown in as a sweetener.

It was for these reasons that DrRich predicted last fall that the big insurers would have no choice but to root for and support the Democrats in 2008. (DrRich actually specified at that time that the insurers would support Ms. Clinton. He did not realize that she was then in the process of blowing the nomination by - among other things - forgetting to organize in the caucus states.)

Since DrRich initially posed his theory we have seen Warren Buffet (a major booster of Democratic candidates) placing a huge bet on the big health insurers - which undoubtedly means a) he strongly believes a Democrat will win the White House this fall, b) he understands what this victory will mean to the industry, and c) he reads this blog, which is the only place you can get political and economic theory like this.

We have also seen the major health insurers completely capitulate on their chief mission of providing affordable health insurance to the masses, thus announcing to the world that they no longer have the means, the will, or the intention of seriously trying to reduce the cost of healthcare. A clearer plea by the insurers to “Vote Democrat - Please!” could hardly be imagined (except, of course, for the fact that they are giving their financial support overwhelmingly, and for the very first time, to the Democrats).

DrRich admits that his theory originally was laced with a certain amount of sarcasm and irony, and was based at least partially on speculation, intuition, and confabulation. Nonetheless, developments since that time have provided us with hard facts that, while seemingly impossible to explain with more conventional thinking, are readily explained and even predicted by his theory.

Indeed, DrRich’s theory (and Warren Buffet’s investment strategy that is so obviously based upon it), look more infallible each and every day.

Posted in Healthcare economics, Investment "advice" | 2 Comments »

Attention Warren Buffet - Health Insurers Capitulate!

May 22nd, 2008 by DrRich

An article in the May 19 issue of American Medical News reports that America’s largest for-profit health plans will continue to rapidly increase their insurance premiums, even though doing so will continue to lose them subscribers.

In a conference call, WellPoint President and CEO Angela Braly told analysts, “We will not sacrifice profitability for membership.” Similarly, UnitedHealth Group CEO Stephen Hemsley said, “We continue to protect our margins. … We are committed to sustaining a quality business without taking shortsighted pricing positions.”

These statements, which are merely the actions of any responsible CEO trying to protect his/her company’s stock price, have garnered the expected expressions of outrage and indignation. After all, as Dr. Poses nicely documents for us, the mission statements of WellPoint and UnitedHealth Group assure us that these companies are both dedicated to making health insurance affordable and accessible. So how can these companies in good conscience abandon the effort to keep their products within a reasonable price range? Their failure to do so (as documented in the AMNews article) is already causing businesses to drop health coverage for employees, and contributing greatly to the rising number of uninsured Americans.

The answer, of course, is the obvious one. These publicly traded companies have a primary responsibility to their shareholders, and failing to take every opportunity to maintain a reasonable profit margin would make them guilty of violating their fiduciary duties. Besides (contrary to what most seem to think), the people who actually are insured with their products are in no way their customers. In fact, the insured (and their accomplices, the doctors) are the source of “medical loss,” and the insurance companies owe it to their shareholders to restrain these parties, by using every means at their disposal. So for insurance companies to take an action that is so manifestly against the interests of their subscribers ought not to surprise anybody.

The truly notable feature of this latest development is that it amounts to a complete and final capitulation, a straightforward admission that these companies have, at last, formally abandoned the purpose for which Congress turned them loose a couple of decades ago. Congress sanctioned for-profit HMOs, and gave them extraordinary protections under the law, for one purpose, and one purpose only - to harness the power of the free markets to control the cost of healthcare. And while it has been obvious for at least a decade now that for-profit insurers actually have no clue as to how to accomplish this feat (despite their numerous draconian efforts at covert rationing), until this moment they have publicly maintained the pretense that, given enough time and latitude, they’d find ways to bring costs down.

But that’s all over now. Ms. Braly and Mr. Hemsley have said it. We, the for-profit HMOs, the entities on which the Gekkonians have been pinning all their hopes for nigh unto 15 years, and the entities on which even today Mr. McCain is basing his entire healthcare reform plan, are completely bereft of cost-containing ideas. We haven’t a prayer of figuring out how to cut healthcare costs, or even how to slow cost inflation enough to prevent truly remarkable increases in our premiums - even though those increases are dropping our subscriber numbers and scaring the hell out of our shareholders and causing our market value to plummet. We, the for-profit HMOs, have officially entered the end-game.

So, Mr. Buffet: Your investment strategy is still on-track. You will soon be able to pick up several hundred thousand more shares of WellPoint and UnitedHealth Group at truly bargain prices, as current shareholders (seeing these companies circling the drain as surely as a subscriber with an expensive-to-treat cancer), scramble to bail out. And seeing a high probability of a Democratic victory in the fall, conventional wisdom will drive the prices even lower. So keep your powder dry.

Thanks to DrRich, only you (and the other people who read this blog, most of whom think DrRich is engaging in irony) know that it’s a Democratic victory, and not a Republican victory, that will send these stock prices soaring once again. What an opportunity!

You’re quite welcome.

Posted in Healthcare economics | No Comments »

Two New Reviews for Fixing American Healthcare

November 21st, 2007 by DrRich

“Through the use of a simple quadrant device, Fogoros gives consumers an understanding of how various healthcare systems work, and their multifarious-not to mention nefarious-implications. Fogoros proceeds-with gin-clear specifics, propped by ample research, and with an abiding sense of decency-to balance fairness with the common good. Informed and humane. Some presidential candidate would be smart to sign this gentleman up as a healthcare adviser.”
Kirkus

(Note to you who have considered DrRich to be hubristic and bombastic: You stand corrected now that Kirkus, surely an authoritative voice, pronounces him decent, informed and humane.)

“Fogoros has a unique communication approach that reaches down to the layman, while addressing the professionals directly involved in the process evolving in American healthcare today. “Fixing American Healthcare” is a book that should be read by everyone enrolled in an HMO, or other healthcare plan, as well as every plan provider or professional involved in healthcare. Fogoros has come up with priorities that every citizen needs to take to heart, to protect themselves and their loved ones in a time when they will need healthcare.”
Richard R. Blake
Reader Views

You will find an up-to-date summary of testimonials and reviews of Fixing American Healthcare here.

Posted in Fixing American Healthcare | No Comments »

One Hell of an Exit Strategy

November 13th, 2007 by DrRich

How else to explain the strange behavior of insurance companies?

Item 1: Bob Laszewski at Health Care Policy and Marketplace Renewal points us to a Los Angeles Times article describing how one health insurance company (Health Net Inc.) has systematized its practice of rescinding health insurance policies of patients who become sick. The article describes 51-year-old Patsy Bates, whose coverage was rescinded in the midst of her therapy for breast cancer, allegedly for failing to disclose her accurate weight and the possibility of a prior heart problem at the time she had applied for insurance. See the article for details, but the point is that the alleged (and disputed) failures to disclose have nothing whatever to do with her breast cancer. They amount to mere excuses to cancel her insurance (but not until she needed it - they were delighted to collect the premiums up to that point).

This story is entirely consistent with the tale told by Lee Einer, the notorious insurance company “hitman” featured in Michael Moore’s film, Sicko. Einer has subsequently expanded on his former activities in gaining rescission for insurance companies on the Honest Medicine blog:

(When you get sick). . .the insurer will go after you “like it’s a murder case.” They will contact every medical provider they believe treated you, and will request medical records. They will contact every pharmacy which you are believed to have used, and request their records. They will go into your health history as far back as five years before you applied for coverage. If they find anything — ANYTHING — which they determine that you did not fully disclose, and which could conceivably have been captured by the questions on your application, they have you.

Laszewski expresses the puzzlement that any thinking American would express in regard to this kind of activity:

It’s hard to imagine a worse headline for the health insurance industry just as we are heading into what will be a fundamental debate over who should run our health care system. It is even harder to imagine a dumber thing for the insurance industry to do than continue to argue and litigate the notion that an insurer can cancel–or rescind–an insurance policy for a misstatement of fact on an application for coverage no matter whether that statement was intentional or material.

Indeed, for the relatively small amounts of money it can save (relative to the massively expensive PR campaigns these companies run to convince us of how innately caring they are, and which they completely negate with such antics), it is hard to imagine why they take this kind of chance.

Item 2: Health insurance companies are big contributors to Hillary Clinton’s campaign. This might seem counterproductive considering the widespread notion that, if her reform plans are fully implemented, ultimately the role of private insurers in the healthcare industry will shrink or even disappear.

Why would insurance companies engage in high-profile, counterproductive activities, and contribute to political candidates who may want to put them out of business?

DrRich has a theory.

Insurance companies have recognized that the end-times are nigh.

In the early days, their chief mode of growth was in acquiring public assets (such as non-profit hospitals and HMOs) for a tiny fraction of their actual value, then after absorbing them, realizing the true value of these assets in their stock prices. The insurance industry has also nearly finished the exhilarating, immensely profitable consolidation phase of its business cycle, such that a very few large outfits now tower over the health insurance industry. So now, for the first time in their history, health insurance companies are going to have to try to make a profit - or even more difficult, to demonstrate continued growth - by actually managing the healthcare of their subscribers.

Faced with this impossible, panic-inducing task, the risk of running illegal, high-profile rescission operations begins to seem worth it. The risk of getting caught is now measured quarter to quarter - not long term. “Our risk of getting caught in the next 3 months seems relatively small,” they must be telling themselves. “As for the long-term risk of getting caught, who cares?”

Ditto with the contributions they are making to Democrats, especially the Democrats who seem most likely to win, and to push their healthcare reform plans. Republicans, who invariably promote the notion of private-insurance-based solutions, must seem really scary to the insurers. If Republicans win, there will follow completely untenable expectations on the part of insurance companies. They’re the ones who will have to figure out how to control costs!

Democrats will also put the industry in an untenable position, of course, and will at least arguably aim to drive them out of business (though without actually telling us so). But Democrats actually have no expectations for the insurance industry, other than that they fail in due time. This, DrRich submits, is the insurance industy’s plan, too.

But before they drive them into oblivion, the Democrats promise to create for them one last, massive windfall - namely, the government-paid insurance premiums for many of the 47 million uninsured Americans. (Joseph Paduda at Managed Care Matters thoughtfully estimates for us that windfall as $150 billion per annum - not exactly chicken feed.)

So, for at least a while, under Hillary’s plan the insurance industry profits will rise, stock prices will rise, and executive bonuses will rise. This is as good as it’s going to get.

In 1994 the insurance industry (then early supporters as well) took a look at Hillary’s massive plan for healthcare reform, and said, “My God! We’ll be out of business in 5 years!” And they became intractable enemies of her reform plan.

Today, they look at their situation and say, “My God! We’ll be out of business in 5 years!” And they see in Hillary a means to engineer those 5 years into one hell of an exit strategy.

Posted in General Rationing Issues | No Comments »

Why Implantable Defibrillators Have To Be Rationed

November 6th, 2007 by DrRich

Before leaving medical practice eight years ago to become a writer and consultant, DrRich spent nearly 20 years as a cardiac electrophysiologist - a cardiologist specializing in the treatment of heart rhythm problems. And from 1982 until he left practice, his major research focus was to help advance the safety, usability and effectiveness of the implantable defibrillator (known as the ICD).

The ICD is an implantable pacemaker-like device that monitors the heart rhythm, and if a fatal heart arrhythmia occurs (an event known as a cardiac arrest), it automatically shocks the heart back into a normal rhythm. Almost from the moment of its first use in patients in 1982, the ICD has been the only method ever developed that substantially reduces the risk of sudden death in high-risk patients. If a person with an ICD has a cardiac arrest, there is roughly a 99% chance that the ICD will save them.

The ICD has become the poster child of covert healthcare rationing, and in his writings on this space DrRich has not been shy about pointing that out, for instance, here, here and here. DrRich believes that covertly rationing the ICD, like all covert rationing, is harmful to individuals and to society. In this particular case, the large majority of high-risk patients who have clear indications for ICDs - supported by clinical science, by professional guidelines, and even sanctioned by HMOs and Medicare - are not receiving them. And as a result, it appears that thousands of patients who could have received ICDs are dying suddenly. (Over 300,000 Americans die suddenly from cardiac arrest each year.) But the problem goes even deeper than that.

There are three features about ICDs that make them compelling targets for rationing. The first two render them attractive targets for covert rationing. ICD companies and the electrophysiology community are well aware of these two features, and in their own ways are working to counteract them. But the third feature will require limiting (or even eliminating) the use of ICDs even if we were to move to a system of fair, equitable, open rationing. And here, both ICD companies and electrophysiologists are in a state of continued and obstinate denial.

Feature 1) Preventing sudden death is hugely expensive.

ICDs themselves and the medical procedures necessary for their implantation are very expensive, generally $30,000 or higher, and estimates are that upwards of 500,000 “new” candidates for ICDs are created each year. (These new candidates come from the pool of patients who survive heart attacks or develop heart failure annually.)

The finances look even worse if you’re a Medicare administrator or an HMO executive. To you it looks like this: Today, sudden death removes hundreds of thousands of high-consumers from the rolls each year. If these patients were instead to receive ICDs, then not only would you have to pay for the ICDs, but you would also have to continue paying their long-term healthcare costs (which are substantial since most have chronic, underlying heart disease), not to mention their Social Security. Today these people are conveniently and efficiently dropping dead, and preventing their sudden deaths would create a huge problem for you - even if the ICDs themselves were free. You can only conclude that preventing sudden death is simply bad public policy.

Feature 2) There is no constituency for sudden death.

Under a system of covert rationing, the rationing decisions are not based on issues of efficiency, effectiveness, or fairness - they’re based (and MUST be based) on what you can get away with. And it is particularly easy to get away with covertly rationing ICDs.

This is because sudden death has no constituency. Breast cancer has a constituency; AIDS has a constituency; cerebral palsy has a constituency. But Jerry Lewis never held a telethon for sudden death.

The large majority of people who are at high risk for sudden death don’t realize it. After a sudden death has occurred, the surviving family is often told that their loved one died of “a massive heart attack,” or some other purely unpredictable and unavoidable “act of God.” Patients and loved ones do not have, and doctors do not choose to impart, any sense of the predictability, preventability, or survivability of such a thing. So there is precious little demand for ICDs; what little there is can easy be ignored or pandered to.

The bottom line: Under a covert rationing paradigm, preventing sudden death is something payers (whether the government or insurance companies) will naturally and desperately want to avoid. At the same time, since sudden death has no constituency and there is no great hue and cry about it, it will be relatively easy for them to get away with rationing ICDs. Clearly then, if there’s any medical therapy that’s ripe for covert rationing, the ICD is it.

But even if we were able to eliminate covert rationing today, ICDs would still require rationing. This is because:

Feature 3) The ICD industry and their chief customers - electrophysiologists - embrace a completely dysfunctional and counterproductive business model.

Building and selling ICDs is an enterprise whose continued success utterly depends on maintaining very high price points. While the unit cost for building an ICD may be a few thousand dollars, to make ends meet most of these devices must be sold for over $20,000. This is because ICD companies get paid only once for an ICD - on the day of implant - but they continue incurring expenses as long as the device remains in service. These “lifetime” expenditures include monitoring of device function; maintaining expensive, rigorous quality and reliability processes; and backing up every implanted device with a large force of highly-trained and expensive field clinical engineers who are available to electrophysiologists 24/7, anywhere and everywhere, for “troubleshooting” and even for routine follow-up. All this “extra” stuff must be fully accounted for in the initial cost of the device. High price points therefore are essential to this business model.

Maintaining high prices in a competitive environment is not easy. It requires that ICD companies release “new” models every year or so. Occasionally these new models have useful improvements, such as smaller size or longer lasting batteries. But frequently they are simply “fancier” in some way that is designed to achieve a marketing advantage with their customers - high-end electrophysiologists.

Electrophysiologists have a clear agenda here as well. Their “demands” on ICD companies, expressed in rigorously conducted marketing surveys and focus groups, inexorably lead to ever more complex devices. This complexity allows electrophysiologists (a small community whose growth is tightly controlled) to maintain a professional stranglehold over the implantation and management of ICDs. It’s a matter of turf protection. Since ICDs are already exceedingly complex devices, and grow more complex with each succeeding generation, then “obviously” one must be a high-end specialist to understand and manage all their nuances. (In real life, they are so complex that not even many electrophysiologists can keep up with them, thus necessitating the need for armies of field clinical engineers in the employ of ICD companies.)

Clearly, this business model - as manifested by the synergy between ICD companies and cardiac electrophysiologists - is fundamentally dysfunctional. It utterly precludes ICDs ever becoming as widely used as both ICD companies and many electrophysiologists think they ought to be, that is, in hundreds of thousands of new patients each year.

Under a system of healthcare rationing - whether overt or covert - this business model is simply a non-starter. Even observers like DrRich, who devoted his career to the problem of sudden death, can begin to sympathize with Medicare and the HMOs in their attempts to stifle the use of ICDs under such a model.

Unfortunately, covert rationing fosters a perpetual continuation of this dysfunctional business model. Open rationing, on the other hand, would immediately reveal this model as being entirely obsolete and unworkable, and might (at last) goad the ICD industry into the direction it ought to go - toward developing implantable defibrillators that are simple, reliable, effective, easy to implant and manage, long-lasting and cheap.

ICDs are not only the poster child of covert rationing, they are also a particularly compelling example of how covert rationing inherently fosters waste, profligacy, inefficiency, and tangled and counterproductive incentives, throughout the healthcare system - even in the private sector, whose proponents invariably extol its natural efficiency.

Posted in General Rationing Issues | 2 Comments »

Medical Home Invasion

August 24th, 2007 by DrRich

Last year, the American College of Physicians (ACP) published a “policy monograph” on the Advanced Medical Home, which urges a “new” model of medical practice. Under the “medical home” paradigm, patients would have a personal physician who partners with them over time, coordinating all their medical care and guiding them, whenever necessary, through the confusing halls of American healthcare. Among the many benefits of such a practice model, the ACP notes, would be a strengthening of the doctor-patient relationship.

“Great idea!” DrRich found himself exclaiming when he first read the monograph. In fact, DrRich has felt this to be a great idea for 35 years, since he was first starting out. Indeed, this has been the fundamental idea behind behind primary care medicine for, well, forever. Heck, it was the driving force behind Marcus Welby. So why did the ACP (one of the premier organizations of primary care doctors in the world) find it necessary to “rediscover” its own central idea, and then to rechristened it? What gives?

Reading more carefully, DrRich found in the ACP monograph some clues. The medical home would require doctors to adopt evidence-based medicine and decision support tools to “guide” medical decisions, to demonstrate continuous improvement in key quality indicators, and to participate in programs that measure and report overall performance. Further, the medical home would require a new kind of reimbursement model for doctors. The specifics of such a reimbursement scheme were unspecified, but pay-for-performance was mentioned. Hmm.

Then, earlier this month light was shed upon what, exactly, gives. The beans were spilled by means of a press release issued by the ACP, two other prestigious primary care organizations - the American Academy of Family Physicians (AAFP) and the American Academy of Pediatrics - and UnitedHealth Group. (That’s right, UnitedHealth Group, the Uber-HMO.) The press release is titled “UnitedHealth Group and physician groups to launch ‘medical home’ pilot program to reward primary care doctors who improve patients’ total health.” (More details were provided by the AAFP here.)

In the press release, UnitedHealth Group (which at least was cagy enough not to put “and physician groups” in parentheses) gets top billing. And as you read the press release it quickly becomes apparent why they do - it’s their show.

In the pilot program for health home, UnitedHealth Group will provide participating physicians with “quality improvement and care management systems,” and the means for incorporating these tools into their practices. Apparently, then, UnitedHealth Group will control the data and the “decision support tools” for determining when and how patients are treated, and for what. Fear not, however, since all medical decisions supported by these tools will be geared toward both “quality and efficiency.”

Available public documents on this new effort do not specify what will happen when medical decisions that lead to optimal outcomes will result in significant increases in spending, rather than in “efficiencies.” (Contrary to managed care dogma, improvements in quality do not always result in cost savings, and vice versa.) But the medical home pilot, as one would predict for any healthcare scheme heartily endorsed by a major health insurer, has safeguards to assure that when quality and cost are at odds when making medical decisions, doctors will always tend to err on the side of reducing costs.

This is made plain by the new physician reimbursement scheme to be used by the medical home pilot:

“UnitedHealth Group will pay participating physician practices a monthly care-management fee based on projected savings for all patients that select a medical home. In addition, the company will share any excess savings that accrue from the pilot program with the physician practices and — by way of premium reductions — with employers.”

That is, doctors will be paid according to their ability to not spend UnitedHealth Group’s money on patient care. The less they spend on patient care, the more they make.

DrRich gets it now. This is not some new, revolutionary reimbursement scheme. It’s the same old reimbursement scheme, slightly dressed up.

Supreme Court Justice David Souter said it plainly in 2000, writing for a unanimous court in Pegram vs. Herdrich:

“Like other risk bearing organizations, HMOs take steps to reduce costs. These measures are commonly complemented by specific financial incentives to physicians, rewarding them for decreasing utilization of health-care services, and penalizing them for excessive treatment. Hence, an HMO physician’s financial interest lies in providing less care, not more….Inducement to ration care is the very point of any HMO scheme…”

UnitedHealth Group is simply responding to the request by the ACP for a “new model” of primary care by giving them what they want. But you can put lipstick on a pig all day long and it’s still a pig. Whether you call it medical home, pay for performance, or just plain managed care, as long as the big insurers (and the feds) are the ones who determine the doctor’s viability as a practitioner, and as long as patients are the individuals who cause doctors to risk their viability as practitioners, the genuine practice of medicine - and the fabled doctor-patient relationship - must remain fond dreams.

Posted in Gekkonian Rationing, Primary Care in America | 4 Comments »

Feds May Begin Physician Profiling in 2008

August 17th, 2007 by DrRich

The Government Accountability Office (GAO) says that Medicare is ready to begin physician profiling as early as next year.

Physician profiling, the actual (and refreshingly honest) term used by GAO, is also known as “resource use comparison.” Under this system the feds will compile statistics on the utilization of healthcare resources by individual doctors and physician groups, in order to compare their “burn rates” of healthcare dollars.

This information can then be fed back to the doctors themselves, so they know how much of the government’s money they are spending as compared to their peers. Such data may cause some doctors to realize that they could be delivering care more efficiently. This, indeed, is the stated aim of the regulators. The purpose of physician profiling, according to the GAO, is to “reduce wasteful and potentially harmful overuse of services.”

But on the other hand, it seems just as likely that this data would cause some doctors to realize that there are tests and procedures their peers are performing that they are not. And such a realization may cause them to question whether they ought to be delivering care more thoroughly, or to say it another way, to utilize more services in order to improve quality. This is decidedly not the stated aim of the regulators.

Doctors know something that the regulators also know but won’t admit: Cost and quality do not always move in the same direction. Sometimes the best medical option is much more expensive than the cheapest option. So when you make a medical decision, at least sometimes you have to decide whether to err on the side of quality or cost.

When doctors get their “profiles” from the feds, then, and see how much money they are spending compared to their peers, how are they to act? If they are spending more, but are sure their “extra” spending is for very good medical reasons, will they sacrifice quality in order to come down to the mean? This is what the feds want them to do; they’ve already said so.

Will doctors comply? They will. They’ll have to.

Doctors already have experience with physician profiling by HMOs and other big insurers, and they know what it means to be an “outlier.” With the private third party payers, being an outlier means being weeded out. They either comply or their practice suffers.

The feds will not be so gentle. The feds will almost certainly subject outliers - not all outliers, not even most outliers, but enough outliers to create a general “buzz” - to their special scrutiny. The mere threat of coming under investigation for the federal crime of healthcare fraud - which can mean financial ruin, professional ruin, and long jail terms - is enough to bring most doctors to heel.

If a doctor’s profile says he’s spending more than his peers, the smart doctor will do what the feds say he should do: equate quality with efficiency, and cut his costs (and his losses).

Posted in Wonkonian Rationing | 1 Comment »

SiCKO and Covert Rationing

August 3rd, 2007 by DrRich

DrRich finally saw Michael Moore’s film SiCKO this week, and found it to be surprisingly affecting. DrRich is quite jaded about the injustices routinely and systematically performed by the American health insurance industry, and has written about them extensively. But even he was moved by the personal stories Moore presented of those who lost their health or their loved ones at the hands of their insurance carriers, and even by the stories of guilt-wracked former insurance company employees who knowingly helped perpetrate these injuries. It is difficult to walk out of this film thinking that the American health insurance industry is anything other than fundamentally evil at its core.

And yet, what might a health insurance executive think upon seeing this film (assuming that any of them could have made it past the first 20 minutes, which is doubtful)? DrRich is of the opinion that true evildoers - folks who delight in knowingly doing what they believe to be inherently harmful acts - are rare. He suspects that that whatever evil persons exist are fairly evenly distributed amongst the professions, and that the insurance industry probably has only a few more than their statistically allotted portion. So how might your average insurance executives react to this movie?

DrRich guesses that such people might feel that Moore has perpetrated an injustice against them. After all, we (i.e., society) have deputized insurance executives to ration our healthcare. Indeed, the US Supreme Court has formally ruled that HMOs were created specifically for this purpose. (See Pegram et al v. Herdrich, 2000.) Yet, we have not allowed them to ration openly, with rules that can be seen and understood by all. (That would be rationing, which is taboo.) So what are the insurance executives to do? Their only option is to ration covertly, and that’s just what they have done. In this light, Moore’s unfriendly exposure of some of the systems they have implemented to conduct this society-mandated, congressionally legislated, Supreme Court approved task of covertly rationing our healthcare might indeed seem somewhat unfair to those executives.

Unfair or not, Moore’s film clearly shows how perverted our current system of healthcare rationing has become. But when you get right down to it, one of the chief perversions is that the money “saved” by instituting the kind of covert rationing Moore illustrates does not end up reducing the cost of healthcare (which is what society wanted when it deputized the insurance industry to ration). Instead, that money winds up as profit.

And this is where DrRich part ways with Moore. Moore’s solution is simply to get rid of the profit motive, to turn the whole thing over to the government. But as the government has already illustrated, it’s brand of covert healthcare rationing is ultimately every bit as draconian and harmful as the covert rationing performed by the insurance industry. Perhaps more so. If we go to universal healthcare with government-controlled covert rationing, Moore’s just going to have to make another movie in a few years to illustrate the new, government-mandated healthcare depredations (assuming that by that time the central authorities will permit him to make such films).

For the ultimate problem is not the profit motive, it’s rationing. There are lots of ways to fund our healthcare system; whether completely through for-profit entities, completely through the government, or through some combination of these. And it’s the funding (and thus the control) mechanism that we always end up fighting over. But no matter what funding mechanism we end up with, and no matter whether we end up there by design or by default, the real question remains: Yes, but how are we going to ration?

Posted in Gekkonian Rationing, Wonkonian Rationing | No Comments »

Why the Doctor-Patient Relationship Has To Go

July 30th, 2007 by DrRich

Consider the problem faced by the CEO of an HMO, or a Medicare administrator, or any one of the other individuals we have deputized to reduce our healthcare costs.

When such an individual looks out over the landscape of medicine as it is traditionally practiced, he beholds a frightening sight: over two million times each day, individual physicians and individual patients - just the two of them, alone in a room - make millions of individual decisions about which healthcare resources should be called upon for the sake of that individual patient at that particular time. And when each of these decisions is finally reached, and the doctor places pen to paper and signs her name, the entire medical-industrial complex immediately bends to her will.

Our CEO, witnessing all this in a cold sweat, is thinking, “They’re spending my money.”

Actually, they’re spending society’s money. But whoever has dibs on the money, the fact remains that we can no longer allow such spending decisions to be made in a vacuum, as if the cumulative effect of those decisions on society are irrelevant. Since we cannot affect those individual spending decisions through an open system of rules - since that would be admitting that we are rationing - we must affect them in some other way.

To both the HMO executive and the governmental regulator, the answer is quite simple. Coercive pressure must be applied at the focal point of all healthcare spending - the physician-patient encounter - to force spending decisions to be made on the basis of something other than what is best for the patient.

Covert rationing requires that decisions made at the bedside be made with society’s priorities in mind, and not the patient’s. Indeed, covert rationing demands that the doctor forgo his primary duty to his patient, in favor of “the greater good.” The demand is non-negotiable. If doctors are reluctant to give up their traditional role as their patients’ advocates, they must be coerced into doing so, and the ones who still refuse need to be weeded out. Thus, an essential truth is revealed. The engine that drives covert rationing must be - can only be - disruption of the doctor-patient relationship. So the traditional doctor-patient relationship has been specifically targeted for destruction by both the Gekkonians and the Wonkonians.

There is no denying that the needs of society are important. In fact, if the proportion of the gross national product we spend on healthcare is not soon limited, we will find our society becoming dangerously unstable. But by choosing to limit our health care spending surreptitiously, by rationing at the bedside, by making our physicians the agents of rationing instead of the agents of their patients, we choose a particularly deadly approach to this problem.

Doctors, as imperfect as they are, are the only thing standing between patients and the growing lust for cost-cutting displayed by HMOs, insurers, hospitals, the government, and the majority of citizens who are not seriously ill at any given time. When we permit the destruction of the traditional doctor-patient relationship, not only do we abandon patients to their own devices in this hostile environment, we do so in their very hour of need, and at the very time they are least capable of fending for themselves. The doctors, too, are grievously wounded by the loss of this relationship. For when doctors turn away from their obligations to their patients, even if only because they are coerced, they betray the first principle of medical practice and devalue their profession to the point of worthlessness.

But when compared to the need to keep the rationing covert, both the right of the sick patient to an advocate and the integrity of the medical profession have been reduced to “nice to haves.” Worse, they have been reduced to “must goes.”

Posted in General Rationing Issues | 4 Comments »

Why Gag Clauses are Obsolete

June 20th, 2007 by DrRich

After the collapse of the Clintons‘ plan to federalize healthcare in 1994, the Gekkonian HMOs experienced explosive growth. For the remainder of the 1990s, American doctors had little choice, if they hoped to retain access to American patients, but to sign contracts with one or more of these HMOs. The large majority of these contracts contained clauses that subsequently came to be called “Gag Clauses.” Here is a typical Gag Clause:

“The physician agrees not to take any action or make any communication with patients or patients’ families, potential patients or potential patients’ families, employers, unions, the media or the public that would tend to undermine, disparage, or otherwise criticize (this HMO) or (this HMO’s) health care coverage. The physician further agrees to keep all proprietary information such as payment rates, reimbursement procedures, utilization-review procedures, etc., strictly confidential.”

In plain and straightforward language, a Gag Clause prohibits the doctor from disclosing certain types of information to his or her patients. The forbidden information is likely to be material to the patient’s ability to accurately assess the doctor’s medical advice, and therefore the lack of that information may impact on the patient’s health. A Gag Clause renders it a violation for a physician to tell his patient anything that might cast the HMO in a negative light, such as “This HMO, unlike the health plan up the street, won’t cover a certain treatment that might benefit you.” Or, “You really ought to have a CT scan, but the HMO pays me more if I don’t offer it to you.”

A Gag Clause clearly and egregiously negates the historically sacred physician-patient compact. Yet, physicians, completely without choice, signed the new contracts by the tens of thousands with nary a peep of complaint. The Gekkonians made a brazen assertion to doctors. They said, “You answer to me, and me alone. You’re all mine.” Doctors, by their legally-affixed signatures, acknowledged that assertion.

From a purely practical standpoint, Gag Clauses are a threat to patients.

But from a more philosophical standpoint, what the Gag Clause represents – by the fact that HMOs used them with impunity and physicians signed them with little more than a whimper – is a formal death certificate for the physician-patient relationship. It officially and legally certifies that the doctor’s first loyalty is to the integrity and reputation of the HMO, which supersedes any loyalty or duty that might exist toward the patient.

Gag Clauses attracted a fair amount of criticism in the late 1990s, but essentially only from the standpoint of it’s not being nice to “gag” physicians from telling their patients what they need to know. Little has been said about the implications of HMOs having had the audacity to include Gag Clauses in physician contracts in the first place, or of physicians quietly and timidly signing them by the tens of thousands.

In response to the voiced concerns over Gag Clauses, the General Accounting Office more recently conducted a study to assess their continued prevalence in HMO contracts. The report concluded that Gag Clauses are no longer a problem, and for the most part they don’t even exist any more.

The reason they don’t exist anymore is that the HMOs, feeling the heat, have converted them to “business clauses.” Generically, business clauses require the signer (usually an employee) to agree not to disparage the business, not to encourage clients to use some other business instead, and not to break confidentiality with the business. In other words, business clauses are merely gag clauses somewhat reworded, and then relabeled.

In this manner HMOs have asserted that, since they are a business, they have a right to the same protections as any other business. And if assertion of those business rights require the business’ contractors (i.e., doctors) to forego previous arrangements and understandings (i.e., the doctor-patient relationship), well, that’s business. The GAO, apparently, was swayed by this argument.

Various proposed Patients Bills of Rights require striking Gag Clauses from HMO-physician contracts. Presumably (now that they are just business clauses), that has already been accomplished. But even if all such clauses – whatever they are called – are struck from every contract this very day, the damage has been done.

For, when HMOs asked physicians for a declaration of loyalty that superseded all other loyalties, physicians gave it. Removing Gag Clauses from contracts at this point doesn’t change the fact that, when asked, physicians signed.

Once a dog learns to heel, you can get rid of the leash – the dog still heels just fine. The HMOs have more than made their point.

Posted in Gekkonian Rationing | No Comments »