Medicare can be frustrating.  The constantly changing rules, regulations, audit requirements, fee schedules - all of it.  To receive pennies on the dollar from a system that has turned into a large distraction and huge disincentive to providers gets old for many, but it’s what we have to deal with to provide care through the failing system.

What’s even more frustrating is to hear in the Miami Herald about a South Floridian with a drug-trafficking conviction who successfully ran eight (count ‘em) medical equipment companies using fake names, submitting over $48 million in false Medicare claims during his reign of fraud.  While many of us were working hard to keep our expenses to the system low as we provided care to our Medicare population during 2005-06, this same criminal profited to the tune of $8 million, landing a quarter of that money in his own pocket.

And if he were the only one.  In South Florida alone, medical equipment and HIV-infusion fraud amounts to a loss of $7 million per day by the Medicare system, or $2.5 billion per year.  And how’s this for a statistic - investigators reported to congress that between the years 2000 and 2007, the identification numbers of 18,240 deceased physicians were used to rack up $92 million to fraudulent medical equipment providers.

Not that eliminating fraud would by itself save the Medicare system, but a $7 million-per-day hole in the taxpayers’ bucket from only one region of the U.S. is certainly evidence that there is a long way to go to get the system on the right track.

Read the full story from the Miami Herald here.

The Centers for Medicare and Medicaid Services, which manages the 43-year-old federal insurance program for the elderly and disabled, doesn’t have a specific amount for the cost of corruption nationwide. Internal audits mainly focus on billing mistakes, excessive payments and other waste with only a fractional measure of fraud. Therefore, the agency estimates its combined loss is $11 billion annually.

Private healthcare companies, credit card companies and other industries have implemented new technology to fight fraud aggressively, but Medicare has failed to adopt even the most basic changes that the U.S. Department of Health and Human Services’ inspector general has warned are sorely needed to combat the crisis.

Medicare, one of the government’s largest agencies, seems more intent on paying claims quickly than verifying them first, according to many critics and law enforcement officials.

We blog a bit about healthcare policy at The Healthcare Entrepreneur, but mostly about the impact that policy has on practice owners and how practice owners must adjust in order to stay afloat in the midst of our turbulent healthcare landscape. 

There is no bigger influence on this landscape than Medicare, and the recent activity in Congress surrounding the scheduled 10.6% cuts to the physician fee schedule have had us all on edge, as we now wait for a final answer from President Bush who The White House confirms intends to veto legislation to reverse the cuts (HR 6331) - the legislation was recently passed by the House of Representatives and the Senate.

To put it bluntly - and quite obviously - this is a pretty big bummer for our Medicare practices.  With payment rates dropping by approximately 40% over the past decade, and practice costs rising every year, why would anyone think that medical practices wouldn’t have cause to adjust - if they don’t, they’re not going to survive.

So, as one would expect, physicians and other healthcare providers who accept Medicare patients are quite simply beginning drop the program.  Even worse, some are talking about leaving the profession altogether.  This ABC News report speaks to the pain that physicians are feeling and how they are responding to the pressure.

To [Dr.] Tipsword, this round of Medicare reimbursement cuts, to become effective July 15, could make or break her family practice. (In many states, these cuts affect Medicaid too.)

“I have struggled to build up my practice, but my outlook gets worse each year,” Tipsword said. “The current round of Medicare cuts — which will cut my repayments, which are miniscule right now — as well as increasing malpractice insurance coverage, despite an A+ rating, makes it less feasible for me to continue practice.”

However, the meeting yielded no short-term fix for the problem, and by the end of the session it was clear that the 10.6 percent cut would likely go through anyway.

Now, Tipsword says she is working on an exit strategy from the program. At times, the bureaucratic demands of the job make her consider going even further.

“Due to all the daily headaches of practice — referrals, endless duplicate paperwork to prove medical necessity, phone calls, documentation, etc. — I would honestly love to get out of medicine altogether,” she said.

If you read this blog regularly, this won’t be the first time you’ve read a post about the growing trend in medicine that favors reimbursement for procedures over time spent with patients, regardless of how important or necessary that time is to the overall plan of care.  As the leader of many trends in medicine, Medicare is the driving force behind this direction our reimbursement system is taking, and there isn’t an immediate end in sight.  This article from the Wall Street Journal explains how this trend is reducing the availability of needed specialty care in the United States by providing a disincentive for medical students to pursue specialty areas that rely on cognition rather than procedural expertise.

A discipline built on spending time with patients to gather clues for a diagnosis, neuro-ophthalmology could become another casualty of a medical payment system that favors high-tech procedures over low-tech exams. The median income of a neuro-ophthalmologist at a teaching hospital is $200,000, according to the North American Neuro-Ophthalmology Society. That’s a third less than most general ophthalmologists, who undergo less training but can see more patients, and do more pricey procedures, in a given day.

Many in health-policy circles have focused on how the current health-care payment system is helping create shortages among primary-care doctors, internists and others on the front lines of medicine. But often lost is how the system is endangering some of the country’s most highly trained specialties as well.

Endocrinologists, rheumatologists and pulmonologists — specialties that also don’t involve performing many procedures — face acute shortages. Many of the severest deficits affect children. Though nearly 300,000 children in the U.S. are diagnosed annually with juvenile arthritis, lupus or other complex rheumatic diseases, there are fewer than 200 pediatric rheumatologists to take care of them, according to the U.S. government’s Health Resources and Services Administration.

Kyle commented on RAC’s in his post on March 5th.  The incentives underlying RAC’s leaves much concern for those receiving (or soon to be receiving) audits, and this post by Dr. Rich at the Covert Rationing Blog makes the point that even practice owners and managers that try with all their might to comply with the ever-changing and difficult-to-understand Medicare regulations are left with little clarity in the matter, making compliance near impossible.  Unfortunately, this doesn’t hold a lot of weight as compared to the generous percentage of collections that provides the fuel needed for RAC’s to go for the throat during the recovery audit process.

The conclusion…if you haven’t already, invest in the companies involved with the recovery audits, because there is a lot of money that’s going to be made in the process.

The RACs are paid by commission. Essentially they are bounty hunters, and they get to keep 20% of whatever they collect. According to the Associated Press, hospitals and providers are just a tad worried that these contractors, being so generously incented, will prove a little overzealous in their enthusiasm to find fraud. But worried auditees should not look for sympathy from the public. “A little zealotry is what we’re looking for on the part of the taxpayers,” said Leslie Paige, spokeswoman for Citizens Against Government Waste. “We think it’s about time.” Indeed - everybody can get behind fighting fraud, which is what makes the fraud gambit such a powerful tool for covert rationing.

It is good to be an RAC, and, DrRich suggests, it would also be good to own stock in whichever companies are contracted to perform the audits. These outfits are about to harvest the vast bounty of obfuscation that Medicare has been carefully cultivating for 40 years, and has been carefully fashioning as fraud-traps for a somewhat shorter period of time.

Many providers have felt the “heat” of an audit performed by a Recovery Audit Contractor (RAC).  For those that have not heard of these groups, they are private audit companies that are contracted by Medicare to determine if clinics or hospitals have erred in their medical billing.  The process includes an auditing of charts and claims, determination of a percentage of error, and a demand for the percentage of all money received from Medicare for the previous several months to year be returned.

What concerns many providers and medical group administrators about this is the fact that RAC’s are reimbursed based on a percentage of all the money that is returned to Medicare.  Certainly, one could argue that this incentive based approach to finding errors in medical claims is questionable. 

Read this recent article by Kevin Freking to learn more about RAC’s coming your way.

The contractors have shown they’re pretty good at their work. In just three years, they’ve returned more than $300 million to the federal government — and that’s just from three states. That experiment is winding down. But a larger, national program will soon take its place.

The rollout of “recovery audit contractors” will be gradual. They’ll monitor health care providers in 19 states beginning this spring. In October, an additional five states will join.

Health care providers are nearly unanimous in their dislike of the program’s continuation, much less its expansion. Many lawmakers have similar sentiments, though it was Congress in 2006 that made the program permanent.

There are many legitimate reasons for a patient no-show, but trying to manage an efficient practice requires that providers and practice managers do everything possible to prevent the downtime of clinical staff.  Cancellations are tough, but no-shows leave no opportunity to fill a time slot from a waiting list, and often times expensive staff is left with little to do.

As if good healthcare isn’t enough incentive to show for appointments, perhaps a monetary incentive is really what is needed to keep patients showing for their patients.  The American Academy of Family Physicians reports on a new Medicare billing change that allows physicians to charge for missed patients, as long as a few rules are followed.

When a patient fails to show up for an appointment, the resulting hole in the physician’s schedule can mean the loss of billable time. However, a change in Medicare’s general billing requirements now allows physicians to charge Medicare beneficiaries for missed appointments.

The policy became effective in October, but many family physicians still are unaware of the change.

According to the Medicare Claims Processing Manual, Chapter 1 - General Billing Requirements, CMS’ new policy allows physicians and suppliers to charge Medicare beneficiaries for missed appointments, as long as they also charge non-Medicare patients for missed appointments.

There’s a lot going on in our economy right now, and while Medicare and stiff competition from physician owned practices aren’t solely responsible for the tough times faced by some physical therapy practice owners, one would be hard pressed to show that they aren’t playing a significant role.

“Are physical therapists feeling pressures across the country? Absolutely,” said Dave Mason, the American Physical Therapy Association’s vice president of government and reimbursement advocacy.

Physical therapy businesses are facing competition from doctors who are more frequently operating in-house physical therapy practices, Mason said. Both private insurers and the federal Medicare have launched more determined cost-control efforts, he added.