The Center for Public Integrity

The big five health insurance companies have begun reporting their third quarter 2012 earnings and so far, they are pleasing their shareholders with profits that are better than Wall Street expected, in large part because they are doing especially well in one key area: Medicare.

Over the past several years, the largest insurers — Unitedhealth, WellPoint, Aetna, Cigna and Humana — have reported record profits, even during the quarters when enrollment in their employer-based and individually purchased health plans declined because of the recession. They’ve been able to do this in two ways: by taking in significantly more in premiums from their commercial customers than they have paid out in medical claims, and by persuading increasing numbers of retirees to enroll in their Medicare Advantage plans. If you enroll in one of their plans, the government sends a check to the insurance company you choose for your coverage. The amount varies depending on where you live. You might have to pay an additional premium out of your own pocket for better drug coverage, a broader network of providers, reduced copayments and discounts on gym memberships.

Many lawmakers have wanted to privatize Medicare for years and saw the Medicare Advantage program as an ideal way to begin that process. But insurers wouldn’t offer the plans without a significant financial incentive to do so. So several years ago the government started padding the checks it sends the insurers to get them to participate. By 2010 the cost to the government of Medicare Advantage patients on average was 117 percent of regular fee-for-service Medicare.

Federal officials will focus on possible Medicare overbilling by doctors and hospitals that use electronic medical records, a top government fraud investigator said  Wednesday, in announcing investigative priorities for the coming year.

“Electronic medical records can improve quality of care and efficiency and help us uncover cases of fraud and abuse. At the same time, we must guard against the use of electronic records to cover up crime,” said Daniel Levinson, the Department of Health and Human Services inspector general, in a video presentation.

The video posted on the agency’s website on Wednesday summarized the inspector general’s “work plan,” for 2013, a listing of Medicare and Medicaid fraud fighting efforts the agency plans to emphasize.  

The plan states that the agency “will identify fraud and abuse vulnerabilities in electronic health records (EHR) systems as articulated in literature and by experts to determine how certified EHR systems address these vulnerabilities.” The agency did not provide further details of its review. 

The economics of switching to electronic health records is receiving new scrutiny 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 are worsening as doctors and hospitals switch to electronic health records. A similar report was subsequently published by the New York Times.

When people find out I used to work for an insurance company, many of them ask if I can help find them a decent policy that won’t bust their family budgets. Many others ask if I would consider going to bat for them after their insurer has denied coverage for a potentially life-saving treatment. And a lot of folks have reached out just to tell me their stories, just to get someone to listen.

That was the case following my column last week about Mitt Romney’s contention that uninsured people don’t have a problem getting the care they need — that the care is readily available in hospital emergency rooms. The commentary provoked an outpouring of emotion illustrating just out tragically out of touch many of our political leaders are.

Readers have left more than 600 comments since my column was published last Monday here and by the Huffington Post. Many were written by folks who just wanted to express an opinion about Mr. Romney’s comment or about Obamacare. But many others were from people who wanted to talk about losing a loved one or not being able to pay for care because of a system that has come to be controlled by powerful insurance companies. Here, in their own words, are a small number of them. They should provide all the evidence any politician needs to understand that the ER is not the magic cure some of them apparently think it is.

A class-action lawsuit accuses Aspen Dental, one of the nation’s largest corporate-dental chains, of illegally owning dental practices and of deceiving patients.

A joint report by the Center for Public Integrity and PBS FRONTLINE titled “Dollars and Dentists” reported in June that Aspen Dental’s practice of serving patients who cannot afford a dentist has led to complaints of patients being locked into debt as well as being overcharged and given unnecessary treatments.

The lawsuit brought by 11 patients alleges that Aspen Dental owns and controls its 358 dental clinics in violation of laws in 22 states which allow only dentists to own a dental practice. The lawsuit was filed yesterday in federal court in Aspen Dental’s home state of New York.

Aspen Dental said Friday that “the accusations that were made in yesterday’s filing are entirely without merit.” The company is owned by a private-equity firm, Leonard Green & Partners, and markets to patients who often cannot afford to go to a dentist.

The company says that it also provides support services to dental offices owned by local dentists.

“The dentists and staff at Aspen Dental offices around the U.S. provide access to high quality, affordable dental care for millions of patients,” the Syracuse-based company said. “Their singular commitment is to do what’s right for their patients.”

However, attorneys for the patients, Brian Cohen and Jeffrey Norton, say in the lawsuit that Aspen Dental trains the dentists and sets production goals for them, accusing the company of illegally practicing medicine.

The nation’s top health information technology official has launched an internal review to determine if electronic health records are prompting some doctors and hospitals to overbill Medicare.

Dr. Farzad Mostashari, the Obama administration’s National Coordinator for Health Information Technology, said in an interview Monday afternoon that his policy-setting committee of experts would examine the issue and make recommendations on how to address it. 

It is the second government action 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 Center’s year-long investigation, published in September, suggested that Medicare billing errors and abuses are worsening as doctors and hospitals switch to electronic health records. A similar report was subsequently published by the New York Times.

Mostashari said he wants to find out if the digital systems are triggering higher billing codes by allowing doctors to cut and paste records from prior encounters with a patient, a practice known as “cloning.” Many experts say that this process can raise the size of a patient’s bill, even though it reflects little in the way of added or necessary medical service.

“If we are just copying the same information over and over, that’s not good medicine,” Mostashari said. “I’ve asked the policy committee to provide guidance on that.”

Mostshari also said that he wanted to determine if some software functions that do little more than prompt doctors to inflate the size of their bills “should be off limits.”

I understand where Mitt Romney was coming from when he said last week that Americans without health insurance don’t have to worry about dying at home.

“We don’t have people that become ill, who die in their apartment because they don’t have insurance,” the GOP presidential nominee told members of the Columbus Dispatch editorial board. “We don’t have a setting across this country where if you don’t have insurance, we just say to you, ‘Tough luck, you’re going to die when you have your heart attack.’ No, you go to the hospital, you get treated, and it’s paid for, either by charity, the government or by the hospital.”

I have no reason to believe that Romney saw anything wrong with what he said. In fact, I probably would have said the same thing back when I was still a health insurance PR guy and trying to convince folks that the problem of the uninsured wasn’t really such a big deal.

And Romney is absolutely right, people who are uninsured don’t have to die in their apartments. They can indeed be rushed to a hospital, and the hospital is obligated to treat them. It’s what he didn’t say, and likely doesn’t understand because he simply can’t relate to 47 percent of us, that is actually more important: many of the uninsured die in the hospital, in the emergency room, because they could not afford to get care earlier when it might have saved their lives. Instead of going back home to their apartments, many of them, unfortunately, go to the morgue.

In 2007, when the Democratic candidates for president were beginning to talk about health care reform, I was asked to write a policy paper that the insurance industry would use to “educate” people about the uninsured. I found that if you sliced and diced the data in just such a way, you could make people believe that many of the uninsured were simply shirking their responsibility by not buying coverage.

During last week’s debate, GOP presidential nominee Mitt Romney once again pledged to repeal Obamacare, but he was light on details about what he would replace it with, other than to suggest that his administration would encourage states to come up with reform plans of their own.

“What we did in Massachusetts is a model for the nation, state by state,” he said. “And I said that at that time. The federal government taking over health care for the entire nation and whisking aside the 10th Amendment, which gives states the rights for these kinds of things, is not the course for America to have a stronger, more vibrant economy.”

But considering that the Massachusetts law was the model for Obamacare, what, other than replicating what Massachusetts did, are the states to do?

High on the list of recommendations in Romney’s health care platform is an idea frequently touted as a silver bullet by conservatives: allow insurance companies to sell policies across state lines. Doing so, they say, will increase competition and, consequently, bring down the cost of coverage.

The problem is that no one had done a study to determine definitively whether the across-state-lines idea would work — until now. And the conclusion of that study, conducted by the Georgetown University Health Policy Institute, is that allowing coverage to be purchased across state lines is much more of a blank than a bullet.

The study also finds that no new federal law is even needed to allow insurance companies to sell policies across state lines.

“With or without changes to federal law, states already have full authority to decide whether or not to allow sales across state lines and, if so, under what circumstances,” the study noted.

Four Republican House leaders want federal officials to suspend payments to hospitals and doctors who switch from paper to electronic health records, arguing the program may be wasting billions of tax dollars and doing little to improve the quality of medical care.

In an Oct. 4 letter to Health and Human Services Secretary Kathleen Sebilius, they suggested that $10 billion spent so far on the program has failed to ensure that the digital systems can share medical information, a key goal. Linking health systems by computer is expected to help doctors do a better job treating the sick by avoiding costly waste, medical errors and duplication of tests.

The letter urges Sebilius to “change the course of direction” of the incentive program to require that doctors and hospitals  receiving tax money get digital systems that can “talk with one another.” Failure to do so, the letter says, will result in a “less efficient system that squanders taxpayer dollars and does little, if anything, to improve outcomes for Medicare.” The letter urges Sebelius to suspend payments under the program until rules are written requiring that the systems share information.

The letter is signed by Ways and Means chairman Dave Camp, R-Mich., Energy and Commerce Chairman Fred Upton, D-Mich., Ways and Means health subcommittee chairman Joe Pitts, R-Pa. and energy health subcommittee chair Wally Herger, R-Calif.

The Office of National Coordinator for Health Information Technology, which runs the incentive program, did not respond to a request for comment on the letter on Friday.

The harsh criticism from Congress is unusual given the strong support that digitizing medicine has received from both political parties in recent years.

Paula Sellers suspected the small Nevada hospital where she worked was overcharging Medicare and other health insurers for some emergency room services.

Sellers ran Boulder City Hospital’s health information department, which helped apply the complex series of Medicare billing codes doctors and hospitals must use to get paid for treating the sick.

But Sellers alleges in a lawsuit that her bosses told her to “back off” when she doubted the accuracy of the coding — and fired her in May when she refused to sign off on it.

“When she tried to complain, she got terminated,” said her lawyer, Jesse Sbaih. The wrongful termination lawsuit, filed in July in Clark County District Court in Las Vegas, has been moved to federal court, where it is pending. The hospital and its billing agent deny the allegations.

Every year, hospitals and doctors use the five-digit billing codes, developed by the American Medical Association, to bill Medicare for hundreds of millions of office visits and other services. Hospitals use these “Evaluation and Management” codes to bill for emergency room and outpatient physician charges and other fees. In past years, Medicare has for the most part paid medical bills with few questions asked, even though the coding process can be confusing and subjective.

But billing practices are facing new scrutiny as Medicare officials and other insurers seek ways to put the brakes on escalating health care costs. On Sept. 24, U.S. Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder notified five groups representing hospitals and medical professionals that they could face criminal prosecutions for padding bills by choosing higher-paying codes even if the services delivered didn’t justify them — a process known as “upcoding.”

If you want to get a clearer understanding not only of why the U.S. health care system fails so many of us but, more importantly, how we can transform it to make it the best in the world, go to the movies this weekend.

Regardless of your political affiliation or your opinion of Obamacare, you will find “Escape Fire: The Fight to Rescue American Health Care,” a compelling and convincing indictment of a health care system controlled by special interests that profit from the status quo and that spend millions of dollars every year to make sure nothing happens in Washington that would be harmful to their bottom lines.

You will also find that it offers some common sense ideas of how to fix many of the things about our system that are badly broken, including fixes that won’t require an act of Congress but that will require some innovative thinking and risk-taking on the part of health care providers, employers and other stakeholders in the private sector.

"Escape Fire" describes how health care in America has turned into a business, how the quest for money has hurt the quality of care provided to patients and how it has kept millions of us from having access to even mediocre care.

As a consequence of allowing this to happen, our system has become littered with perverse incentives, such as paying for medications and procedures that address only the symptoms but not the underlying causes of illness and disease, and not paying for prevention. Because of those perverse incentives, we have a system that rewards quantity instead of quality and that leads to unnecessarily expensive and often harmful overtreatment. And we spend enormous amounts of money on the latest high tech equipment but give short shrift to high-touch care, which in many cases is exactly what the patient needs.