Tag Archives: wsj

WSJ exposes flaws of Medicare’s pay now, investigate later culture

In the latest story to take advantage of their paper’s Medicare data trove, The Wall Street Journal‘s Mark Schoofs and Maurice Tamman use egregious cases of physicians abusing Medicare’s physical therapy reimbursements to demonstrate the weakness of Medicare’s “pay first, look into fraud later” approach.

They show that, given the data the federal government has access to, detecting fraud should be a speedier, more effective process. CMS has its reasons for slow fraud detection, but Schoofs and Tamman clearly aren’t buying them all.

There are plenty of reasons why Medicare often fails to stop questionable payments up front. To protect law-abiding doctors and hospitals — the vast majority — Medicare is required to pay nearly everybody within 30 days. Medicare says it is reluctant to suspend payments to providers who may have made honest mistakes, out of concern that beneficiaries might go without needed treatment.

The reporters identify what they say is “a central problem” – Medicare isn’t taking advantage of its claims database, a computerized record of every claim submitted and every dollar paid out.

The Wall Street Journal originally identified Dr. Wayne and the other medical providers discussed in this article through a Medicare database that is much more limited than the one available to fraud investigators. The database, obtained in conjunction with the nonprofit Center for Public Integrity, contains records only through 2008, and includes the claims of just 5% of randomly selected Medicare beneficiaries.

Peter Budetti, the head of the new Center for Program Integrity at the Centers for Medicare & Medicaid Services, says the system is working toward fraud prevention and that “he’d like to emulate the credit-card industry, which has developed software to flag suspicious charges before paying them.”

WSJ details conflicts that drive spine fusion surgery

The Wall Street Journal‘s John Carreyou and Tom McGinty have taken advantage of their paper’s Medicare data stockpile to look at the conflicts of interest and piles of royalty money that drive the popularity of spine fusion treatments whose effectiveness has been disputed. Their work centers on Medtronic, which the Milwaukee Journal Sentinel‘s John Fauber also has written about.


Photo by planetc1 via Flickr

For surgeons, the financial incentives to perform spine fusions can be strong. Though hospitals often lose money on the procedure when it’s performed on Medicare patients due to the high cost of the implants, the surgeons themselves can get paid as much as $12,000 per surgery.

Complex fusions … are reimbursed by Medicare at a sharply higher rate than decompressions, to account for the elaborate spinal devices used and the longer length of surgery. Complex fusions increased 15-fold among Medicare beneficiaries with spinal stenosis from 2002 to 2007, according to the JAMA study.

A big part of many surgeons’ income lies in their consulting and royalty arrangements with device makers, although disclosure of these arrangements remains piecemeal for now. Medtronic began releasing information about its payments to surgeons on its website in June, after coming under intense scrutiny from Sen. Charles Grassley (R., Iowa).

They’re required to keep some details under wraps, but the WSJ duo still manages to unleash anecdotes, including one about a surgeon who received “between $400,000 and $1.3 million in royalty, consulting and other payments from three spine-device makers.”

For reporters looking to understand the medical issues surrounding these procedures and why these conflicts can be detrimental to patients, see Janet Moore’s work in the Star Tribune.

Why insurers care about the medical-loss ratio

The Wall Street Journal‘s Avery Johnson explains the significance of the “medical-loss ratio,” a single metric within the reform bill that holds great significance for the insurance industry.

The ratio, known to wonks as the MLR, signifies the percentage of premiums insurers use for medical costs versus the amount that goes to paying administrative overhead. For individual and small-business plans, it’s set at 85 percent medical to 15 percent administrative. For larger businesses, the magic medical number is 80. Those who don’t meet the threshold would be forced to pay rebates to customers.medical-loss-ratio

At present, the key issue seems to be subsidiaries. Major insurers have hundreds of them each, and while the insurer could meet the requirements if all subsidiaries were averaged together, they won’t be able to hit the numbers at every single subsidiary. Current draft documents, Johnson reports, seem to imply that each subsidiary would be judged separately, a practice which insurers say might force them to stop providing insurance in certain high-risk areas.

Applying uniform numbers to the segmented, fragmented insurance industry could prove tricky. Johnson looked at the numbers.

UnitedHealth, for instance, has about 392 subsidiaries, according to Goldman Sachs health-care analyst Matthew Borsch. Its average MLR for individual policies is 69%, dragged down by a 63% ratio at its dominant Golden Rule subsidiary, according to a report by Goldman Sachs that examined state insurance filings. The Minnetonka, Minn., insurer could owe about $280 million in rebates in 2012, Mr. Borsch estimates, based on his reading of the methodology in the health care law.

The rules will be set by the National Association of Insurance Commissioners, a coalition of state insurance regulators. They’re hoping to have recommendations ready for HHS by the end of this month.

Infection-reduction measures vs. the real world

The Wall Street Journal‘s Katherine Hobson writes about the recent JAMA study which she says demonstrates that publicly reported infection control measures, including checklists, “don’t actually correlate with post-op infection rates.”

The study was designed to evaluate the six infection control measures tracked by the Surgical Care Improvement Project. Those measures include everything from antibiotics to hair removal and blood glucose levels.

None of those measures correlated with infection rates individually, Hobson writes, but when taken in aggregate things start to look a little better.

Study lead author Jonah Stulberg, a recent graduate of Case Western Reserve University School of Medicine (where the research was conducted) tells the Health Blog that the score is called an “all-or-none” composite, which is like a pass/fail: The hospital gets credit for a particular patient only if all the appropriate measures are taken.

With the statistics out of the way, Hobson addresses the biggest question: Why aren’t these prevention measures making a difference in the real world? The answer, as it always seems to be in these situations, is that life is complicated and human beings aren’t robots.

… there’s a big difference between a practice being proven to be effective in a clinical trial and then developing a measure that tries to estimate how often it’s done and then report it publicly.” Real life is messier, and factors such as surgical skill and hand-washing practices are tougher to measure.

Dale Bratzler, CEO of the Oklahoma Foundation for Medical Quality, tells the Health Blog the results don’t surprise him. Individual process of care measures for things such as heart attack and pneumonia also haven’t been shown to correlate with outcomes, he says.

APA’s new policy seeks collaboration with pharma

The Wall Street Journal‘s Shirley Wang looked beyond the American Psychiatric Association’s new conflict of interest guidelines to explore what the APA’s loosening of ties with major pharmaceutical manufacturers meant for their business model and future. The APA has lost 10 percent of its revenue – about $7.5 million – over the past year as pharma is spending less on advertising in their journals and sponsored symposia have been phased out of the APA annual meeting. That last move, Wang found, cost the organization about $2 million.

In an interesting twist, Wang says that while some of the decline in pharma advertising can be attributed to the recession and APA’s attention to COI, some of it comes “because the industry faces its own pressures to avoid potential conflicts of interest.” Overall, pharma’s ad spending in health care publications has slipped from $865 million in 2005 to $626 million in 2009.

Reactions to these tightening regulations and budgets among APA membership has been mixed, as Wang illustrates:

At the annual conference in 2008 in Washington, D.C., Dr. Scully recalled meeting a group of young residents and medical students at the bottom of an escalator who wanted to “express their outrage” at the industry influence at the meeting. At the top of the escalator ride, he encountered another group of doctors upset that there weren’t enough seats in the industry-sponsored symposia. “A number of members liked those [symposia] and they liked that they got fed,” said Dr. Scully.

In an accompanying blog post, Wang writes that the APA hopes its new guidelines will increase transparency, decrease conflict and still maintain a good, cooperative relationship with the pharmaceutical industry.


COI policy change has medical associations talking