The Center for Public Integrity

After Vermont hospitals started buying up the medical practices of local physicians, state Sen. Kevin Mullin of Rutland, began hearing complaints that prices some patients were paying for routine medical care had soared.

One family accustomed to paying about $120 in out-of-pocket costs for doctor visits and other medical services was outraged when they ended up forking over more than $1,000 for similar visits, Mullin said, mostly for seeing doctors whose practices had been bought out by a local hospital.

 “The only thing that was different was the office was [now] hospital-owned,” said Mullin, a Republican. “All of a sudden everything was charged differently.”

The root of these increases are controversial charges known as “facility fees,” and they are routinely tacked on to patients’ bills not just for services actually provided in hospitals, but also by outpatient care centers and doctors’ offices simply because they’ve been purchased by hospital-based health care systems. Hospitals argue they can’t afford to keep the doors open without facility fees.

Hospitals have billed them at least since 2000 when Medicare set billing standards for doctors employed by hospitals, and private insurers went along. Since then, the fees have grown increasingly common, costly and controversial. Critics argue that the billing practice needlessly adds billions of dollars to the nation’s ballooning health care costs and needs to be revamped. Some private insurers have protested the fees and in some cases even refused to pay them, which can add to the patient’s share of the bill. But getting rid of the charges — or even requiring medical offices to post facility fees — has proved daunting, reformers say.

Over the past couple of years I’ve met many people who, as my mother would suggest, were wishing their life away. But I quickly understood why.

These were folks in their early 60s—and even some in their 50s—who couldn’t wait until they turned 65. They were literally counting the days until they could enroll in Medicare.

Many of these folks had been uninsured for years because of pre-existing conditions.  They’d been blackballed by insurance companies andcouldn’t buy a policy at any price because they’d been sick in the past. Others were underinsured because they simply couldn’t afford decent coverage. Policies that would better meet their needs were being sold to younger people for $300 a month or less. But for them: at least $1,500.

And even the people with coverage were sick and tired of fighting to get medical bills paid and doctor-ordered treatments approved.

I’m betting every member of Congress has heard these same stories. How, then, could any of them even give the idea of raising the Medicare eligibility age a moment’s thought?

Not only would such a thing be cruel, it doesn’t make sense from an economic point of view. If lawmakers take the time to consider the facts, this idea will quickly fall off the table during the fiscal cliff discussions.

Federal officials, in an apparent effort to clamp down on Medicare fraud and abuse, are tightening scrutiny of the  growing numbers of doctors who rely on electronic medical records to bill for their services.

The Centers for Medicare and Medicaid Services has directed its auditors to look more closely to make sure the systems are properly documenting the services being paid for by the government. The new policy, announced in November, went into effect earlier this week.

The new directive was first reported by FierceEMR.

At issue is the impact electronic medical records can have on billing for doctor visits. Doctors must choose one of five escalating payment levels, known as “Evaluation and Management” codes that best reflect the amount of time spent with a patient as well as the complexity of the care.

Medical groups argue that computers make it easier for them to document all of the work they do, which leads to higher codes and fees. But officials worry that the software also can be manipulated to inflate bills — a practice known as “upcoding.”

The stakes are high. Medicare spent more than $33.5 billion in 2010 using these numeric codes for services ranging from routine doctor office visits to outpatient hospital or nursing home care. More than half the doctors billing Medicare were using electronic records in 2011, and that number has since grown further, officials said.

I’ve often said that the Affordable Care Act is the end of the beginning of health reform.  It addresses many problems associated with health insurance, but more must be done to control costs and access real universal coverage. And flaws in the law need to be fixed.

However,  the reform law will end some of the most abusive insurance industry practices,  such as blackballing  folks with pre-existing conditions and cancelling policyholders’ coverage when they get sick.

And health insurance companies now have to spend at least 80 percent of our premiums on actual health care. If they devote more than 20 percent to administrative overhead and profits, they are supposed to send rebate checks to their policyholders. Since that 80/20 rule went into effect last year, consumers have saved almost $1.5 billion, mostly in the form of those rebates, according to a new study by the Commonwealth Fund.

The rule has also resulted in lower premiums for many and elimination of hundreds of millions of dollars in administrative waste. That’s the good news. The no-so-good news is that because the reform law does not give the federal government the authority to regulate rates, many health plans used their administrative savings to boost profits instead of reducing premiums.

That situation reflects not only a flaw in the federal reform law, but also the ineffectiveness of health insurance rate regulation at the state level.  In only a few states do insurance commissioners have the authority to reject unwarranted rate increases, and even in the states that do, many health plans are exempt from state regulatory oversight.

I’ve written before about the tight relationships between health insurance companies and organizations that claim to represent the interests of small employers, specifically the U.S. Chamber of Commerce and the National Federation of Independent Business.

Those two groups have accepted hundreds of millions of dollars over the past two decades from the insurance industry in an effort to kill or weaken health reform initiatives designed to protect consumers, including those who work for small businesses.

The Chamber was the insurers’ organization of choice to derail Obamacare. During 2009 and 2010, America’s Health Insurance Plans —the major industry trade group— funneled more than $100 million of policyholders’ money to the Chamber’s anti-reform advertising campaign.

A decade ago, the NFIB did much of the insurers’ bidding. AHIP and a handful of big insurers bankrolled a front group called the Health Benefits Coalition to block a patients’ bill of rights that enjoyed bipartisan Congressional support. NFIB’s current president, Dan Danner—who was the group’s chief lobbyist at the time—was the Health Benefits Coalition’s lead spokesman.

More recently, the NFIB has been playing a similar role for yet another group that purports to represents small businesses, the Stop the HIT (health insurance tax) Coalition. Insurers are using that group as part of its campaign to get Congress to repeal an Obamacare provision that imposes a fee on some insurance policies. Revenue from the fee will help subsidize coverage for millions of low-income folks who are currently uninsured.

In early 2009, federal officials announced they would pay billions of dollars to hospitals and doctors who agreed to buy electronic medical records and use them to improve the quality of health care.

But the Centers for Medicare and Medicaid Services has since paid out more than $3.6 billion to medical professionals who made the switch without verifying they are meeting the required quality goals, according to a new federal audit to be released today.

The Department of Health and Human Services Inspector General’s audit warns that the electronic records program is “vulnerable” to abuse and that officials should immediately “strengthen” oversight to protect tax dollars from being wasted.  

Many experts believe electronic health records hold great potential to keep people healthier. To achieve that goal, government officials insisted that doctors and hospitals receiving payments meet a lengthy checklist of quality standards, ranging from writing prescriptions electronically to recording immunization and smoking histories.

Yet it’s not clear if that’s happening because nobody checks to make sure. In a response included in the audit report, CMS Acting Administrator Marilyn Tavenner said that requiring medical professionals to prove they are meeting the quality requirements prior to cutting them a check would be burdensome and “significantly delay payments.”

Tavenner said that the agency plans to conduct some audits in the future and would then take steps to recover any improper payments. But the Inspector General opined that CMS should verify compliance first to avoid having to track down miscreants later, a much maligned practice sometimes referred to as “pay and chase.”

Although it’s a few days past Thanksgiving, I’m still feeling grateful, even to much maligned federal employees. Last week bureaucrats at the Department of Health and Human Services did us a big favor by resisting pressure from insurance company executives. Those executives wanted to keep charging some of us more than others and to keep selling policies that offer far less coverage than we need.

HHS Secretary Kathleen Sebelius reaffirmed last week that starting in 2014, insurance firms will not be able to discriminate against us nearly as much as they can now because of our age, gender and health status. And they won’t be able to sell policies with deductibles that are unreasonably high and benefits that are dangerously skimpy.

Among the long-awaited Obamacare regulations from HHS were those that further define the “essential health benefits” that health plans must offer in the future and that limit the amount of money we will have to pay out of pocket if we get sick or injured.

Even though HHS did give the insurance industry some wiggle room on the essential benefits and the upper limits of deductibles they will be able to charge, the integrity of the reform law was protected.

This is important for everyone but especially for those of us who have been around a bit longer. Many of us are now uninsured. That’s because we can’t get coverage at any price due to preexisting conditions or can’t afford what’s available to us because of our age. HHS reassured us that not only will we be able to join the ranks of the insured, we’ll be able get policies that are actually worth buying.

Disruption.

Get ready to hear that word many times in the coming weeks, especially if you hang out inside the Washington beltway.

“Disruption” will be the new buzzword in an upcoming advertising campaign aimed at scaring us. The campaign is selling the idea  that millions of Americans will face higher premiums and possibly be forced into health plans with skimpier benefits — i.e., disrupted — if Congress doesn’t repeal a provision of the Affordable Care Act (ACA) that raises money to pay for expanding coverage for the uninsured.  

The greed of the health insurance industry knows no bounds. Insurance companies will get billions of dollars in new revenue every year as a result of the health act’s requirement that, starting in 2014, we will have to buy coverage from private insurers if we’re not eligible for Medicare or Medicaid.

The Congressional Budget Office estimates that 32 million uninsured Americans will finally get coverage as a result of the law. While many will be newly eligible for the Medicaid program, millions of others will get subsidies from the federal government to help them buy private insurance. So insurance companies will get new premium revenue not only from individuals and families but also from the government.

To help finance this expanded coverage, the ACA includes a premium fee on insurers and their business customers that provide the highest level of coverage (like the so-called Cadillac plans). The fee, which is estimated to raise $87 billion over ten years, will go into effect simultaneously with the individual mandate.  

The nation’s largest hospital group has asked federal officials to create new Medicare pay scales for emergency rooms and outpatient clinics and determine if electronic health records are prompting hospitals to overcharge the federal program.

The American Hospital Association, which represents about 5,000 hospitals nationwide, also signaled that it wants to work with law enforcement officials to write Medicare billing standards that keep its members on the right side of the law.

Hospitals want to ensure that they “receive only the payment to which they are entitled,” Rich Umbdenstock, the group’s president, wrote in a letter dated Nov. 12. The letter was sent to Department of Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder.

“Hospitals share the administration’s goal of a health system that offers high-quality, affordable care and work hard to ensure billing is correct the first time,” Umbdenstock wrote.

The industry has come under fire in the wake of the Center for Public Integrity’s “Cracking the Codes” series, which found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees. The investigation suggested that Medicare billing errors and abuses have been worsening as doctors and hospitals switch to electronic health records.

Like a growing number of disabled Americans on Medicaid, Keith Foreman, a 57-year-old in Metropolis, Ill., qualified for a personal caregiver to help him with daily activities like dressing, shaving, and preparing meals.

Foreman, who prosecutors say suffers from a spinal injury, hired his girlfriend, Sheila McDonald, for the job. In 2011, McDonald received almost $5,000 from Medicaid for six months of care she provided to Foreman.

These personal care services, which are available in all 50 states, are designed to help the sick, elderly, and disabled remain in their homes — and out of expensive nursing facilities. But Foreman was not living at home. During the days marked on McDonald’s timesheets, Foreman was housed in the Massac County jail in Illinois, serving time for forging a stolen debit card signature at a local liquor store.

Like Foreman and McDonald, who both pleaded guilty to charges of making false statements, unscrupulous beneficiaries and home health workers are increasingly targeting personal care services programs for illegal money-making schemes, according to a new federal report. Investigators say lax requirements for both caregivers and patients, along with poor state and federal oversight, has made the rapidly growing programs a lucrative target for fraud.  And this isn’t the first time they’ve issued such a warning.