HEALTH CARE/Joan Retsinas

Winning the Gold

Athletes won their Olympic medals through perseverance coupled with talent.

The health policy winners are just rich, and wealth vaults them to power. As Pharaoh in William Faulkner’s 1955 screenplay, Land of the Pharaohs, noted: He who has the gold rules.

In the health arena, meet the 2008 winner and the runner-up.

Medicare equipment vendors take gold.

The tales of equipment fraud in Medicare are a window into entrepreneurial greed. Medicare receives a constant stream of bills: motorized wheelchairs for a high number of people in one region, all from one company; oxygen tanks for people who don’t need them; hospital beds for people long dead; orders written by physicians long dead. The scam has many permutations.

But Medicare can identify fraud. Do all the people billed for wheelchairs exist? Does everybody receive the oxygen that Medicare pays for? How many claims are for never-delivered equipment, to non-existent patients?

One way to know is to check a random sample of invoices against physician orders. An oversight program, Comprehensive Error Rate Testing, requires auditors to do just that. CERT is a reasonable screen.

Medicare recently boasted success at stemming fraud: their outside auditor reported that the cost of equipment fraud had dropped to $700 million in 2006; 7.5% of claims were not sufficiently documented. This was lower than previous years’ tallies.

The boasting, though, was premature. The Inspector General – the government’s oversight arm—reported that the auditor simply didn’t do the vigilant checking. (“Report Rejects Medicare Boast of Paring Fraud,” Charles Duhigg, New York Times, Aug. 21). Unfortunately for taxpayers, Medicare instructed the outside auditor to ignore CERT. The auditor checked claims that the vendor supplied, without verifying physicians’ orders. In a Casablanca moment (“Gambling, I’m shocked”), fraudulent venders supplied fraudulent forms.

When the Inspector General’s office checked random claims against physician orders, that office found 31% of claims were not supported, or $2.8 billion in fraud.

Without fraud, medical equipment is profitable. An aging population will need more home hospital beds, wheelchairs, oxygen tanks, orthopedic shoes, diabetic equipment. And Medicare guarantees payment.

The winners in this decision-to-ignore are those already profitable companies. Medicare made them even more profitable.

Immediate losers are the taxpayers.

For-profit nursing homes take silver.

Imagine a business school case. A nursing home has a choice: a) a private-paying patient who requires intensive care, or b) a patient on the public dole who requires less care. An MBA goes to the student who chooses “a” (expulsion to anyone who chooses “b”).

The dilemma of Medicaid patients who need intensive care haunts nursing home honchos. For-profit facilities want private-paying patients. That is obvious. The private-pay rate is often double states’ Medicaid rates. But nursing homes can’t simply evict patients on Medicaid. Or can they?

Nursing homes can, and do. Federal regulations allow evictions only for specific reasons (e.g., the facility can’t meet a patient’s needs, or the patient won’t pay). But nursing homes circumvent those restrictions, generally by refusing to take patients back from a hospital stay. (“To Be Old, Frail And Evicted: Patients at Risk,” Theo Francis, Wall Street Journal, Aug. 7). Elderly residents who are infirm and impoverished have fallen victim to bad luck; the evicted ones fall victim once again, this time to the profit incentive. The victimizers—the nursing homes who dump their least profitable patients—easily win the silver.

They miss out on the gold, because the evictions, while egregious, sometimes come as a desperation strategy for facilities that are making the barest of profits. Medicaid does not cover the full cost of nursing home care; and homes with a disproportionate number of Medicaid patients assess patients’ needs against facilities’ solvency.

The immediate losers are the patients forced out of one home into another by harried hospital “discharge planners.” (Medicare’s payment structure encourages rapid discharge.)

In this Olympics, though, all of us ultimately lose. Pharaoh’s adage, “Who has the gold rules” subverts the other golden rule—the “Do unto others” one. That subversion rends the social fabric, leaving all of us poorer.

Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email

From The Progressive Populist, October 1, 2008

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