A while ago, an acquaintance saw her dermatologist for an annual check. She said, "oh, by the way, take a look at the place on my foot where we removed a wart a while ago." The doctor looked at her foot, said everything is fine, then finished the exam. Checking the bill, there was a $400 extra charge for the wart examination!
This nice audio story from NPRs "third coast festival" tells the story of billing codes. Answer: As insurers and medicare/medicaid reduce payment for services, doctors respond by writing up every billing code they legally can. There are whole conferences devoted to billing code maximization. It's a lovely unintended-consequences story. Good luck with that "cost control."
The piece quotes the Institute of Medicine that there are 2.2 people doing billing for every doctor, at a $360 billion dollar cost. I couldn't find the source of these numbers. If any of you can, post a comment.
Of course, being NPR, the program leaves the impression that all this will be fixed in our brave new world of the ACA. But it wasn't even that heavy handed on the point. Perhaps experience is gaining on hope.
Here is my humble recommendation. We siphon off a mere 10% of the huge army of Federal Workers into an accounting task force which will then look into every case of over billing. The other bloated agencies will hardly miss a 10% reduction and we will not have to hire new workers.ReplyDelete
Some people (*cough* Krugman) like to point out that the gov't-controlled health care systems in the US have lower cost growth than the private sector. I wonder how much cross-subsidization is going on here, where doctors respond to lower medicare/medicaid reimbursements by inflating prices paid by privately insured patients.ReplyDelete
Medicare and Medicaid also deny more treatment than private health insurers. Not paying for treatment at all is a fabulous way to control costs. To the system. To the patient.....Delete
And there is a lot of cost shifting from medicare and medicaid patients to private payers.
I'm retired, under 65 and on a high deductable insurance plan, so I got my Flu Shot at Sam's Club for $18.00. My wife is on Medicare (parts A, B, D, F) and got her flu shot at her doctor, and the doctor billed Medicare $118.00.ReplyDelete
Yes. But please check how much Medicare actually paid. I did. For example billing code 90564, flu shot, Medicare reimbursement for 2012 - $18.91. The highest amount I found is $30.92 for high dose (90662). But there also cheaper shots like $6.02 (90657). You should get a letter from Medicare showing the actual amount. And please do not assume that the Government is stupid or inefficient. Traditional Medicare consistently ouperforms Medicare Advantage (private) plans in cost efficiency by about 8 %.Delete
I was curious about this, so I did a bit of research. I'm not (yet) a Medicare billing expert; however, my research suggests that the codes you have referenced above refer to the "CPT" codes that refer to the billing for the *vaccine* and not the administration of the shot. For the vaccine, the CRS has also introduced a new *Q* Code to replace CPT Code 90658 which is the type of flu shot typically given to those above age 65 (Medicare patients). These codes are used to bill only for the vaccine and not the administration of the shot. Naturally, if you give a flu shot, you want to be reimbursed for *both* the cost of the vaccine and the cost of administering the shot. The current reimbursement rate for the administration f the shot (Code G0008) is $25.27.Delete
In the wonderful world of Medicare billing, how much you get reimbursed under G0008 depends on where the shot is given (I'm not talking about the arm or the ass, but whether the shot is in a doctor's office or an outpatient clinic, but perhaps there's a code for the former---I'm not yet an expert). If in an outpatient clinic, it's based on a "reasonable cost".
So, if Anonymous paid $18 for a flu shot at Sam's out of pocket, my guess would be that included both the vaccine and the administration of it. Sam's a business, after all, and they are out to make a buck. Just think of all the money Sam's (and the customer) save by just exchanging $18 for that shot and not having to deal with Q Codes or G Codes. On the other hand, the Medicare reimbursement for both the vaccine and the administration of that shot would be well above $30. That does not include the cost to the taxpayer of having those CRS folks dream up all these codes.
Here's one source that discusses these rules.
This is brought to you, free of charge, as a public service.
Vivian is right. Shot administration charges also apply (code G0008 for Medicare patients). The codes I found were CPT codes (non-Medicare). The right codes are Q2034-2039. The reimbursement rates range from $9.83 to $14.05. The administration rates I found for Michigan are about $23. I looked here: http://www.managemypractice.com/q2034-and-the-new-2012-2013-flu-shot-medicare-reimbursement-codes/ and here: http://www.wpsmedicare.com/j8macpartb/fees/specialty_pricing/2012-administration-pricing.shtmlDelete
In New York City there are now subway, radio, and cable tv ads for trade colleges offering to teach people how to be a "medical billing coder."ReplyDelete
And they claimed ObamaCare was a job killer!
If doctor's were profit-maximizing, they'd have been billing every possible item even if insurers and government hadn't reduced their reimbursement rates.ReplyDelete
I wonder if doctors feel unfairly treated by reductions and react by adding new items. I would guess not. I bet some doctors have always billed to the max and some have not and continue to not add items. This seems like a good question for a dissertation.
Talking with a few private practice doctors, I was a little bit surprised how many of them are only marginally proffitable. I would guess that most docs are not profit maximisers. But, as payers have put the squeeze on them, have become more creative just to keep profits above zero.Delete
I agree. Doctors aren't necessarily good businessmen. In GENERAL, only when the very existence of their practice is threatened do they turn their attention to that.Delete
I would bet that your friend is not on medicare or medicaid and that the $400 bill was a private doctor and a private health plan.ReplyDelete
Yes, private doctor in large hospital, private insurance. But why is this relevant? Private insurance is also mirroring medicare/medicaid and cutting rates per code, as the clip pointed out. And hospitals are under huge pressure to cross-subsidize medicare/medicaid from private patients.Delete
It's relevant because if we reduce your original post to its core propositions you appear to say:Delete
1) private insurance companies dealing with private doctors have not been able to establish a rational billing system;
2) a public system will fail; and
3) we should rely on a private system.
You are making a leap from the premise to the conclusion which I think is unjustified. Possible cross-subsidization effects are a separate issue (and very tricky to calculate effectively because you get into the differences between fixed, variable, average and marginal costs).
Source for the Institue of Medicine figures - http://www.nap.edu/openbook.php?record_id=12750&page=141ReplyDelete
So suddenly the $40 I was charged for the receptionist to ask my child to read the eye chart doesn't appear so bad.ReplyDelete
Paul Krugman, yesterday (as Scott Sumner put it, a preview look at Krugman 3.0)ReplyDelete
Twenty years ago, when I was writing about globalization and inequality, capital bias didn’t look like a big issue; the major changes in income distribution had been among workers (when you include hedge fund managers and CEOs among the workers), rather than between labor and capital. So the academic literature focused almost exclusively on “skill bias”, supposedly explaining the rising college premium.
But the college premium hasn’t risen for a while. What has happened, on the other hand, is a notable shift in income away from labor.
If this is the wave of the future, it makes nonsense of just about all the conventional wisdom on reducing inequality. Better education won’t do much to reduce inequality if the big rewards simply go to those with the most assets. Creating an “opportunity society”, or whatever it is the likes of Paul Ryan etc. are selling this week, won’t do much if the most important asset you can have in life is, well, lots of assets inherited from your parents. And so on.
I think our eyes have been averted from the capital/labor dimension of inequality, for several reasons. It didn’t seem crucial back in the 1990s, and not enough people (me included!) have looked up to notice that things have changed. It has echoes of old-fashioned Marxism — which shouldn’t be a reason to ignore facts, but too often is. And it has really uncomfortable implications.
Can you please explode this embarrassing logic (or lack thereof)?
Best guess: Warming up to defend wealth taxation as a great idea. Bankrupt government first tax "the rich," then find they don't get any money and their economies tank (see Europe). Bankrupt governments then grab wealth, first with taxes on dividends, interest, and capital gains, then with direct wealth taxes. Paul's job is to dream up stories by which this is good for the economy.Delete
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I feel like Paul Krugman is "radicalizing" me just as he claims the Bush administration radicalized him.
I deleted a few more Krugman comments. We're veering way off topic here -- this is a blog post about health care costs not a Krugman bashing/admiring forum. Yes, I was guilty of answering and should probably not have let the whole thing start. Apologies to people whose comments got deleted.ReplyDelete
I commend you for deleting off-topic comments. Blog comment pages could be *so* much better if all bloggers did that. A lot of comments are as good or better than the original post--- but that "lot of comments" is still a small minority of comments, especially on the big-time blogs. (Comment quality on this blog is actually pretty good---so far.)Delete
I am a resident of Ontario, Canada and we are about 40 years ahead of the USA in implementing public healthcare. Healthcare in Canada is the responsibility of the provincial (state) governments, but is partially funded by grants from the federal government.ReplyDelete
In Ontario, healthcare spending consumes approximately 46% of the total budget spending, and is growing at over 7% pre year. The current government is projecting that health care spending will grow to 80% of total spending by 2030. It is crowding out other spending on education, transportation, welfare etc.
The government has resorted to changing the funding model from "fee for service" to a capitation model, where doctors are given a lump sum payment to provide comprehensive care to patients. Health care spending continues to climb.
I am sorry to say, health care spending is and always will be a spending monster. Costs will continue to climb until the system collapses.
And yet, I will bet you that the people of Ontario spend less on health care over all as a percentage of GDP than does the United States while managing to provide reasonable care for everyone.Delete
Health care will everywhere and always be a superior good that consumes a rising share of GDP as societies get richer. The system will not collapse. It will simply max out at some point. There is room for breakthroughs - both social, institutional and technical - in health care that could restrain costs. We can expect to see a "death with dignity" movement among boomers ( I am a boomer ), refusing expensive, and invasive, end of life treatment.
Healthcare spending in Canada is about 12% of GDP vs 18% in the USA. For our money we get adequate, but not leading edge health care. We are net importers of medical technology and techniques from the USA. Most new drugs and therapies are developed in the USA and copied here.Delete
In our centrally planned system, the fee for specific services does not respond to changes in medical technology or technique. If a medical service (cataract surgery for example) benefits from an improvement in technology, the fee schedule is not adjusted downwards, as you would expect in a market system. Thus medical specialties that benefit from technology (Opthamology, cardiology, radiology) are "over compensated" relative to technique dependent specialties (family medicine, general surgeons,obstetricians). These imbalances result in intense inter-specialty rivalry during contract negotiations, as witnessed recently in Ontario.
Tom - You make the case for America to adopt a Canadian system. Full coverage at 2/3 of the cost America pays for partial coverage! As a bonus, a lot of the administrative burden for billing that Prof. Cochrane is concerned about is eliminated with single payer.Delete
Most people don't need leading edge health care and the US is certainly not putting 6% of GDP into medical research. It means little that as between Canada and the US, the US develops more drugs and therapies - the US is ten times the size of Canada and that would be expected.
I'd love to see a US politician stand up and say "most people don't need leading edge health care." Just die quietly and cheaply please.Delete
Absalom- Please...do yourself and American taxpayers a big favour and don't adopt a Canadian System. A single payer (by Governmet) system is a monstrosity. Even here we are moving gradually to a hybrid public/private system. The economics are forcing governments to reliquish control.Delete
If there is one redeeming feature of the Canadian system it is this, universal coverage. Every citizen has access to basic healthcare (even if access is restricted by a shortage of primary care physicians). I am sure that even our moderator Prof. Cochrane, would make the case that the lowest unit cost for insurance coverage occurs if the risk is spread over the largest possible pool. Cover everybody, but don't abandon market price feedback mechanisms.
Tom - I will quote Voltaire:Delete
"Dans ses écrits, un sàge Italien
Dit que le mieux est l'ennemi du bien."
The Canadian system may not be perfect but it is clearly more cost effective than the American system. And any Canadian with the money who is dis-satisfied with the Canadian system is free to seek treatment in the US. I know a lot of Canadians (some of whom are quite wealthy). I do not know a single Canadian who has gone to the United States for medical treatment.
What an invitation: Canadians who have given up and gone to the US, we will hear from you now. I know quite a few.Delete
Where to begin....
In February 1999 the sitting Prime Minister of Canada, Jean Chretien flew on government jets to the Mayo Clinic for treatment, then lied about it afterwards. It was only discovered after he had left office, when the jet flight logs were released to the public.
In February 2010, the sitting Premier of Newfoundland, Danny Williams had heart surgery in Miami. When he was confronted afterwards he said " I did not sign away my right to get the best possible health care for myself when I entered politics"
There is a long tradition of the wealthy and powerful seeking medical treatment in the USA.
The fact that a few Canadians with large independent means (Chretien is wealthy and Williams even wealthier) choose to go to the United States from time to time does not change the fact that the Canadian system works well for the overwhelming majority of Canadians.
At least one meta study has found that overall the Canadian system produced better results: http://www.openmedicine.ca/article/view/8/1
Professor Cochrane: By definition, not everyone will be getting "leading edge" (once something is universal, it is no longer "leading edge".)ReplyDelete
There is an active political debate about how much health care the un-insured and those on Medicare and Medicaid should get. There is an active debate about how much health care generally the country can "afford". The country would be better served if the politicians involved were more honest about what they are proposing and the trade-offs involved.
"The country would be better served if the politicians involved were more honest about what they are proposing and the trade-offs involved."Delete
Hmmmm....it seems you are unaware of the rules of Political Theatre, the first of which is that politicians know virtually nothing about those things and care even less.
The general direction:ReplyDelete
"....the number of diagnosis codes will increase from 13,000 in ICD-9 to 68,000 in ICD-10; additionally, procedure codes will increase from 4,000 in ICD-9 to roughly 87,000 in ICD-10....."