Archive | October 2010

Health Reform: A Tale of Two Charts?

As health reform moves forward, it is worthwhile to take a look at two charts which were produced during the run-up to the legislation.  Each chart represents the view of that side’s stance on health care, so it is obvious which represents the view in favor and that opposed, or is it?

Two features stand out:  the first is the circuit-board complexity of the GOP chart vs. the pastel-colored second chart from Jonathan Cohn.  The second is “Where is the patient in all of this?”  In the second chart, it is easier to identify the patient, tucked off in the upper corner, far from the center of the system.  In the other chart, the patient is down in the lower right, roped in by six or so spaghetti lines.  (Disclaimer, I am not responsible if viewing either chart causes seizures.  Stare at your own risk)

What is obvious is that the system as it stands is very complex, although it is probably less complex than the new system coming with reform.  As various elements of the bill take effect, watch for the unintended consequences, and the responses to them.  It is likely that overall success or failure of the reform effort will be determined by the responses to those unintended consequences.

Increases in health plan premiums, elimination of child-only insurance policies, and the insurance waiver requests by employers such as McDonald’s are just a few of the initial unintended consequences thus far, but they will certainly not be the last.


Feds Take Down Medicare Fraud Gang

The Feds have just broken the biggest Medicare fraud ring to date.  An international gang was taken down for bilking Medicare of over $163M.  How could such a large fraud occur?  It may surprise some to learn that the Medicare payment system is mostly automated.   Claims are submitted electronically, and the computer matches a diagnosis code with a billing code.  If the codes are appropriate, a payment is beamed  to the provider’s account.    This system makes Medicare efficient, but it has the downside of being susceptible to fraud due to its “pay first and ask questions later” policy.

An enterprising crook just needs to get provider credentials,  set up a business bank account, obtain patient Medicare ID numbers and he’s in business.   Other scams have involved criminals colluding with doctors and patients to use their numbers to bill services that never took place.  In this scam, it seems patients and doctors were unaware their numbers were even being used.

As crime goes, this may be more attractive than narcotics, bank robbery, or other seedy activities.  Most of those involve violence and other un-pleasantries.  There can be production and supply hassles.   Here, there is no “turf” to protect.  Capital investment is limited to a few computers.  It is also less dangerous; while the Feds will eventually arrest you, they aren’t likely to smash in and kill everyone.  Enemy gangs tend to do that.  All the Medicare scammer has to do is produce phony bills and watch their account fill up.  It actually resembles typical white-collar cubicle work since their office is unlikely to be that different from any medical billing operation.

These schemes get detected when someone notices spikes in billing activity far outside normal levels.  Qualitative abnormalities can also be seen, such as having ENTs bill for obstetric services and dermatologists billing for cardiac services.  Although “doctor drift” has been a trend in recent years, that is a bit extreme.  It is amusing that the gang took elaborate pains to set up a sophisticated network, went through considerable administrative effort, and then flubbed the basic task of making the services match the type of doctor they were ‘billing’ under.   Had they done this, and kept the volume of services at a reasonable level, this scam might have gone on quite a while longer.

Although the suspects are in a tight spot right now, there is a bright side for them.   If convicted they won’t have to worry about health insurance.  As Federal inmates they will have coverage, likely for many years to come.

Turf Wars and Disruptive Innovation


A patient having his blood pressure taken by a...

Image via Wikipedia


Two recent developments regarding the role of physician extenders are making waves.

One involves the  American Medical Association, which released a statement rejecting an Institute of Medicine report that advocates expanding the role of advanced-training nurses to address shortages of primary care physicians.  (To simplify I will refer to them as NPs – nurse practitioners, although other designations exist).

The other involves a lawsuit pitting the Colorado Society of Anesthesiologists (CSA) and the Colorado Medical Society against the state.   Colorado will became the 16th state to opt out of certain Medicare rules and will allow Certified Registered Nurse Anesthetists (CRNAs) to practice in rural areas without direct physician supervision.

Both of these objections use the argument that allowing lesser-trained professionals to assume the responsibilities of physicians, without supervision, will lead to impaired patient outcomes.  The questions regarding outcomes can be very difficult to answer, and often statistics are cited to promote the agenda of the side presenting them.  For example,  CSA president Dr. Daniel J. Janik cites data that claims 25 to 60 more deaths per 10,000 anesthetics where a physician is not involved.

Although I cannot resolve the statistical argument here, I can observe that because anesthesia is so safe, it will take a large number of data points to show any difference between anesthesiologists and CRNAs.  The safety improvements are credited to the hard work of the specialty, which has implemented many monitoring and procedural standards that have made surgery far safer than it was in prior decades.

In most articles about Turf Wars, there is far too little attention to the role of Disruptive Innovation which helps to bring about the conflict.  In these situations, the disruptor is not a new technology, but a new type of training; the NPs and CRNAs.

In most industries, Disruptors seldom succeed by symmetrically engaging those being disrupted.  Success comes first by gaining legitimacy in fringe areas where the disruptor is welcome, and then moving “upmarket” into other areas.

Sometimes, those being disrupted fail to catch on or do not care, because they may feel that the problems will be borne by the next generation.  It starts with the anesthesiologists who don’t cover less desirable hospitals, with plastic surgeons who are too busy to do breast reconstruction or cover emergency call, and with radiologists who don’t want to read films on weekends or at night.  In all these cases, it is physician behavior that creates these market gaps, which provide an invitation for the disruptive innovator.

Those market voids eventually get filled.  CRNAs step in, allowing  the rural hospital’s operating room to function.  Other types of surgeons handle facial injuries and in some cases, breast reconstructions.  Nighthawk and similar teleradiology services handle the night and weekend work.   Once the disruptor gets a chance to prove that they can do the work, its very hard to make an argument that they cannot do so safely.  Sometimes that simply cannot be proven.

Another often ignored point is this:  by accepting disruptors as legitimate replacements, it is implied that much of the greater training of the disruptee is either superfluous or irrelevant.  If that is the case, why not slash the length and intensity of  all residency programs?  We don’t hear many calls for that.  Residency programs serve as a crucible in which the trainee is marinated until they hopefully emerge as a competent professional.  It is not easy to define which elements of the program are important and which are not, so removing components is fraught with hazard.

In the march toward disruption of anesthesiologists and primary care physicians, it is often stated that disruptors will provide less expensive care.  This is may be true for the provision of anesthesia services,  if CRNA salaries remain below that of anesthesiologists.    But in primary care, it is another story entirely.  There are four areas where the primary care physician controls the further flow of health care dollars:  requests for consultations, medication decisions, diagnostic testing, and decisions for hospitalization.   To be sure, incentive structures often influence these, no matter who is acting in the primary care role.  But all things being equal, the system needs to see the lowest utilization as necessary to achieve good outcomes.  I am not aware of evidence that a full-service primary care operation (as opposed to retail clinics which usually handle a limited set of problems)  will have the same costs when staffed by NPs as by primary care physicians.  A small percentage change, in either direction, of any of the above four areas can vastly alter the national healthcare bill.  So the disruption of the nation’s primary care structure may produce savings, or much greater costs.

The AMA’s response to the Institute of Medicine can be seen here.

The Colorado Society of Anesthesiologists letter to Governor Bill Ritter.

For comprehensive information regarding disruptive innovation in healthcare, see Clayton Christensen‘s book, The Innovator’s Prescription.