I have a significant history of heart disease in my family. Both of my grandfathers died in their 60’s, with one of these men suffering his first heart attack at the age of 36. Given my family history, and the fact that I am 45, I tell people that I consider myself to be in sudden death overtime and if they have a point to make, do so quickly.
In my lifetime, I have seen a significant expansion in life expectancy in developing countries. With this come the attendant struggles that turn up with the needs of an aging population. The United States came up with part of the solution in 1965, when Medicare became law in a time when the average life expectancy for Americans was 70.2 years, compared to today’s 77.9 years.
Medicare in its original form was an imperfect payment model, but one could argue that the program has assisted greatly in adding the nearly 8 years to life expectancy shown above. The challenge before us is to make the program last for coming generations, but due to years of legislative meddling, Medicare now finds itself dying a slow death under the weight of laws that appeared to have great intentions, but in the end have succeeded in hurting Medicare in places where it has shown its highest level of success.
I have stated in the past, and I’ll continue to make this point, that if I was a legislator who secretly wanted to destroy Medicare, I would do everything in my power to craft legislation to make that dream come true. In the past 15 years, that is exactly what has happened.
First, we had the Balanced Budget Act of 1997, which gave us Medicare Part C and the Sustainable Growth Rate (SGR) formula. Medicare Part C has proven itself to be nothing more that tax dollars from citizens subsidizing the insurance industry to spread their already questionable practices to the Medicare program. Not only does Part C have the highest claims error rate of the four arms of Medicare, but there is ample evidence being collected by CMS in the form of audits that shows that the insurance companies who participate in Medicare Part C are exaggerating their risk adjustment data to show that they are providing coverage for patients who aren’t as ill as the carrier would lead us to believe.
Then we have SGR, which for every year since 1998 has promised to cut physician reimbursement at ever higher percentages based on budget projections, but never has. This is in large part to lobbying dollars and threats of the sky caving in if the cuts are allowed to pass. When the cuts actually took place in 2010 thanks to congressional inaction, the administrative costs of the program took a hit when claims had to be re-adjudicated for additional benefits retroactively.
Following up on that disastrous piece of legislation was the Medicare Prescription Drug, Improvement and Modernization Act of 2003. The only way this bill could have been worse is if the writers had been on a peyote binge in the deserts of Arizona. The original 10-year cost of the bill was projected to be $400 billion dollars. The final number will be closer to $600 billion, thanks in large part to lobbyists ghostwriting large parts of the law to insure that is was to their benefit.
The foremost boondoggle this law provided was Medicare Part D, which pays a portion of prescription drug costs for Medicare beneficiaries. Unfortunately, because one of the writers was one Billy Tauzin, a then-congressman from Louisiana, the government purchases drugs from pharmaceutical companies at average sale price, rather than the more cost-effective average wholesale price. Less than a year after this bill became law, Billy Tauzin was one of many people who worked on this bill who retired to take jobs as lobbyists for the pharmaceutical industry, mainly because a simple “Thank-You” note just wouldn’t suffice given the size of this particular gift.
The bill didn’t stop there, as it gave us Medicare Administrative Carriers, replacing Fiscal Intermediaries as part of a wide-ranging contracting reform initiative for the processing of Medicare claims. This game of Musical Chairs continues to this day, with 15 geographical MAC jurisdictions originally planned for Medicare Parts A & B, but now consolidated into 10, with the ultimate goal of 5. All of the competing, re-competing, paper shuffling and uncertainty, to hear CMS tell it, will “improve the efficiency and effectiveness of CMS’ internal MAC procurement and contract administration processes”. Tell that to providers in California, who got clocked by the twin monoliths of contracting reform and NPI procurement at the same time a few years ago, leading to a four-month meltdown in administrative processes and claims payments.
Let us not forget that the MACs are subsidiaries of big insurance companies, so this is yet another example of tax dollars being directed to large insurance companies. If the carriers could show that they were processing claims with a high degree of proficiency, I’d be all for it. The CERT error rates tell a different story. We as tax payers are paying the insurance industry to screw up claims adjudication. Is it coincidence that in the very same bill, we had the genesis of the Recovery Audit Contractor as a “demonstration project”? Why, it’s almost as if someone knew that the MACs would create such a volume of claims mistakes that further private, tax-payer subsidized contractors would be needed to track down the errors, but I guess that’s just me letting my imagination run wild….
The Tax Relief and Health Care Act of 2006 made the RACs permanent. I document this ongoing atrocity every Wednesday in this space. The permanent RAC program has succeeded only in increasing the administrative burden for providers, as well as for Administrative Law Judges, who are being inundated with Level 3 provider appeals of RAC determinations. According to one industry source, more than 60% of RAC appeals found in favor of the providers happen at this level.
So what bill do we have waiting in the wings, now that these three bills have debilitated Medicare with multiple rifle shots, leaving it fighting for its life in the woods?
This week, Ron Wyden a Democratic senator from Oregon and Paul Ryan, a congressman from greater Kenosha, Wisconsin (personally, I’d prefer Red Foreman of That ’70s Show) introduced a “compromise” plan that would take Ryan’s original plan to turn Medicare into a voucher plan and add on a national health insurance exchange that Wyden and Ryan refer to as “traditional Medicare”, but actually isn’t. Let us remember that when someone is given a voucher, the recipient is immediately at the mercy of the entity issuing the voucher. If I am given a voucher for a free night’s stay at a mountain resort, then I show up, only to be pitched a time-share condominium, I don’t go away happy, but rather with the feeling of being conned.
In closing, this posting is meant as a warning to beware of the person who is telling you that his or her latest piece of legislation will “save” Medicare. In many ways, Medicare has already been killed. It just happens to be a slow-acting mega-cocktail of poisons in the form of bills written by a generation of money-compromised politicians whose ultimate goal was to destroy a federal program whose greatest sin was that it was of benefit to a large swath of the country’s population. It will take a bill far different from the Wyden-Ryan Folly just introduced in order to save Medicare in a form that will insure that it continues to be helpful to those who need it, including (someday) me and my family-bestowed dishrag of a heart.