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Medicare at 50 Act

In February of this year, Senator Debbie Stabenow of Michigan introduced Senate bill 470, the Medicare at 50 Act, into the Senate.  The bill would allow individuals and presumably employers to purchase Medicare insurance at age 50.  Since the bill’s introduction, it has garnered the support of 18 other Senators as co-sponsors.


Senator Stabenow calls the bill a “win-win for Michigan families.   It will help strengthen Medicare, lower costs and improve care for millions of people.”


Proponents of the bill suggest that “buying Medicare coverage” instead of employer-based or ACO Marketplace insurance would be less expensive, mainly because what Medicare pays for services is less on average than what insurance companies pay for the same service.  They also tout Medicare’s administrative efficiency and eliminate the private insurance company profit margins as other ways this will reduce costs.  Another benefit of the bill is its impact on people who are not yet 65 but would like to retire.  Those people would theoretically be able to buy an affordable Medicare policy that may allow them to retire early.  This will help with unemployment by opening up jobs for younger Americans.  Businesses both large and small would benefit from lower-cost health insurance options for their older employees.  Even the insurance companies would win under this new bill.  They would get rid of some of their most costly and risky covered individuals, which should lower the cost of their product for everyone else.  Further, most of those same insurance companies offer Medicare Advantage products they could sell to these individuals.  Those products are very profitable for insurance companies.


So, what’s not to love?  If this bill does all of that, why don’t we pass it right away?  Well, like all things in life, the devil is in the details.  While it may be that Medicare at 50 will prove to be a win for individuals, employers, and insurance companies, it most certainly won’t be a good thing for doctors and hospitals.  You see, one man’s expense is another man’s revenue.  A CMS actuarial study showed that, on average private insurance pays hospitals 40% more than Medicare for the same service and 30% more to physicians than Medicare for the same service.  This means that for every patient that converts from a private insurance plan to a Medicare plan, the hospital takes a 40% pay reduction and doctors take a 30% reduction.  For some specialties, like pediatrics and obstetrics, there would be almost no impact due to the population they serve.  However, for many specialties that treat predominately older patients, the impact could be devastating.


Why is there such a disparity between what Medicare pays and what private insurance pays?  The simple answer is that our legislators have decided to under-fund Medicare by holding payment rates constant rather than keeping up with inflation.  This has turned private insurance into an indirect tax.


Consider this:  Medicare pays physician services based on a rate per RVU.  The rate is known as the conversion factor.  Think of it as something similar to an employee’s hourly wage.  If you make $15 per hour and work a 10-hour shift, you earned $150.  For Medicare, its units of work (RVUs) and not hours worked.  In 1998 the Medicare conversion factor was $36.68 per unit.  So, if a service like an office visit was valued at two units, your doctor would get paid $72.74.  Fast forward 22 years, and in 2020, the Medicare conversion factor is now $36.09 without the temporary COVID adjustment.  That’s right; it’s gone down in 22 years.  So, that same office visit that your doctor got paid $72.74 in 1998, he or she would get paid $72.18 today.  Over that same period of time, general inflation, or CPI-U, has gone up 58%.  So, if Medicare had done nothing more than keep up with general inflation, that office visit should be paid today at a rate of $115.92.  Lately, there has been a great deal of debate on the federal minimum wage not keeping up with inflation.  Since 1998 the Federal minimum wage has gone up 41%.  While that has not quite kept up with the 58% increase in inflation overall, it’s certainly better than the 1.6% reduction that physicians have faced from the Medicare conversion factor.


With the cost of running a medical practice going up every year, how have doctors been able to stay in business?  One of the main ways was demanding higher reimbursement from commercial insurance companies who pass those costs on to you and your employer.  Thus, the “indirect tax” I mentioned earlier.


This approach that has worked for the last 20 years or so is in jeopardy if Medicare at 50 is passed.  That’s because large numbers of patients may suddenly switch from private insurance to Medicare coverage.  The resulting loss in revenue could be devastating to physicians and hospitals.  How are doctors going to respond to this change?  Some of them may demand even higher reimbursement from commercial payers driving up the cost of insurance even further.  Others may stop seeing Medicare patients altogether.  Some may consider this to be the last straw and retire early themselves.  Almost half of all practicing physicians are over the age of 55.  Can you imagine the physician shortage that would be caused if even half of those physicians over the age of 55 suddenly retired?  Imagine what the next pandemic will be like if we’ve lost 25% of the physicians who care for all of us?


At this point, some people are probably thinking that doctors are all rich and they can afford to take a pay cut.  While I disagree with those people, I am also sure they have no idea just how much of a pay cut this could be.  Let’s take a look at one medical group.  This is a client, so I have access to their data and know how much their doctors make.  The client is a specialty group, and their doctors make around $400,000 per year.  If this bill gets passed and only 50% of their patients between 50 and 64 buy into Medicare, the doctors in that group will each take a pay cut of $250,000 a year.  That’s a 62% reduction in their income.  If 80% of their patients over 50 buy into Medicare, the doctors would have to work for free.  That’s right, zero salary.  So, how many practices do you think will be able to get their doctors to work for free?


The point of all of this is twofold.  First, the solutions to our health care problems in this country are not easy. There is no magic bullet.  Secondly, just like drug side effects, policymakers need to be careful to consider the harmful side effects of their decisions.  In some cases, the side effects can be worse than the condition they are trying to cure.  Having a Medicare insurance card doesn’t help much if there are no doctors there to accept it.

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2021 – A Healthcare Forecast

The biggest question on everyone’s mind right now is, “When will things get back to normal?”  The short answer is, maybe never.  I realize that doesn’t make anyone happy so let me explain a bit further and specifically in the area of health care and health care delivery.


If we use 2019 as our basis for the last time, things were “normal” and 2020 as our basis for a year that was certainly “abnormal,” we can make some predictions on what 2021 should look like.


The good news is 2021 will be much better than 2020.  The bad news is it won’t be as good as 2019.


The first half of 2021 will be consumed with getting control of the Virus and making sure that enough of the population gets vaccinated to create herd immunity.  This will allow our economy and medical practices to open back up and ease the burden that our hospitals and emergency rooms have been under.


The second half of 2021 will be focused on economic recovery.  We are still facing a massive problem with unemployment and some industries that have been crushed by this pandemic.  The economic recovery won’t happen overnight and will more than likely take years to get back to 2019 levels, if ever.


At some point in 2021 and beyond, we will have to deal with the massive debt that this pandemic produced. We will have to address strategies to avoid inflation and increases in interest rates that often follow periods of rapid debt increases.  With the current 1.9 Trillion-dollar stimulus package, our government will have spent over $5 Trillion in pandemic economic stimulus packages in less than a year.  To put that number into perspective, that is more money than the total gross domestic product for any country in the world other than China and the USA.  That’s right, our stimulus deficit spending is more than the entire annual economic output of Japan and twice as much as France’s economic output.  The big question is what lasting impact, if any, will this kind of deficit spending have on our recovery and our post-Covid economy.


So, what are my predictions for 2021 for physician practices and our health care delivery system?


Here are my top predictions for 2021.


  1. Your patient volumes will be better than 2020 but may not return to 2019 levels any time soon.  This is due to several factors.  Before this is all done, over 500,000 people will have died because of Covid-19.  Those individuals are overwhelmingly older (over 90% are over the age of 55) individuals with underlying chronic conditions.  This means they were high utilizers of health care services.  The pandemic has also had an impact on population growth in the US.  For the last ten years, the US population has increased by an average of 2.2 million per year.  In 2020 that number was down to 1.6 million.  In addition to this, we are still facing significant unemployment, and higher unemployment reduces health care volumes as some people put off or avoid seeking treatment due to financial reasons.  All in all, I would say that any practice that gets to 90% of its 2019 volumes is doing pretty good.  Practices that exceed that are doing very well.
  2. We will not see any significant health care reform in 2021 and probably not in 2022. With its razor-thin majority in the House and a 50/50 tie in the Senate, the new administration won’t have the bandwidth or political capital to tackle health care reform in any meaningful way.  Dealing with the pandemic, getting the economy and the schools open again, trying to raise the minimum wage, and pushing for tax increases to help stop the deficit bleeding is going to take up most of their dry powder.  Behind those things are still student loan forgiveness, climate change, immigration reform, and a whole laundry list of wants that include health care reform.  Those things are more than likely going to have to wait until after the mid-terms.
  3. Insurance companies will do a great job of trying to spin how much Covid hurt them and how they need further concessions from hospitals and physicians to make health care more affordable. This is all BS, by the way.  UnitedHealth Group, for example, produced earnings of $22.4 Billion in 2020.  That was up by over 13% from 2019, which was up by over 15% from 2018.  This is not a company that is hurting financially.
  4. At some point, when the government stops flooding the economy with money, we are going to see the real impact of the economic downturn caused by Covid-19. Practices should pay careful attention to your AR and specifically your patient bad debt.  It’s likely to rise substantially.
  5. Telehealth won’t go away. You simply can’t put that genie back in the bottle.  However, at some point in 2021, the payers will decide how they will pay for those services, and it won’t be at the same level as face-to-face visits.  I believe they will pay at some % of the face-to-face visit, similar to how they pay a mid-level provider visit at a physician visit discount.
  6. If the Democrats hold the majority in the House of Representatives and pick up any more seats in the Senate during the mid-terms, you will see a big push to expand the Affordable Care Act and create the Public Option in 2023 and 2024. This will create significant issues for health insurance companies and will most likely put downward pressure on physician reimbursement and compensation.


The bottom line is this.  We are not out of the woods yet.  We aren’t even close.  In the words of Winston Churchill, “This is not the end.  It is not even the beginning of the end.  But it is, perhaps, the end of the beginning.”


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Surprise Billing

I’m from Congress, and I’m here to help!


At some point, we all find ourselves in need of emergency, sometimes life-saving, care.  Over the last ten months, many American’s have found themselves in the Emergency Department of their local hospital being treated for Covid-19.  One of the great things about our health care delivery in this country is that when you walk or are brought into an ER, you are treated by a team of highly trained professionals who deliver the best emergency medicine available in the world.  They treat you regardless of your insurance coverage or your ability to pay.  The doctors who staff these ERs agree to provide care 24/7  to everyone who walks through their door.  They have done this for decades.  During this pandemic, they are doing so at risk to themselves and their families.


For the last year or so, a debate has raged in Congress about the issue of surprise billing.  Surprise billing happens when you go to an ER, and your insurance company doesn’t have a contract with the physicians who staff that ER.  In that situation, you will get a bill from the ER doctor for whatever amount your insurance doesn’t cover.  That bill is often a surprise to the patient because since the hospital was in your insurance network, the patient assumed the ER group was as well.


These surprise bills can be the result of a group that refuses to contract with an insurance company or, more often than not, because the insurance company was unwilling to compensate the ER group at a rate that was necessary for that group to provide the 24/7 care and staffing required by that facility.


The solution being developed in Congress is to pass a law making it illegal for ER doctors and other hospital-based physicians to balance bill patients.  If passed, this bill would give the insurance companies incredible power and leverage over these physicians.  Think about this for a moment and try to imagine any other profession that has to work under these kinds of regulations.  This law would take a profession that is already required to sell their services to anyone and everyone regardless of their ability to pay and force them to accept as payment in full an arbitrary amount primarily controlled and determined by an insurance company.  Can you imagine calling a plumber in the middle of the night when you have a pipe that burst and telling him that he had to come fix your pipe and that you don’t care what he charges, you were going to pay him a fraction of that amount as payment in full.  Try that sometime and see how fast that plumber hangs up on you.


Now the insurance companies will tell you stories about groups billing absurd amounts of money and using their monopoly power to reap huge profits and fees.  They will talk about how much this costs the American people and how they need this legislation to combat these profit-seeking behaviors.


The problem with that argument is it’s just not true.  Sure, there are anecdotal stories of absurd bills, and sure, there are bad apples in any profession.  Those situations should be dealt with, as they are unacceptable.  However, when you look at the data, it’s clear that Emergency Medicine physicians are not abusing their situation, and they are not getting rich by any means.


In 2019, 12 other medical specialties were said to make more money on average than ER doctors.  Specialties like Dermatology, Ophthalmology, and Plastic Surgery all make more money than ER doctors.  Over the last five years, the salary of ER doctors has gone up by an average of 3.3% per year.  The average wage index for all US workers went up by 3.2% per year during that same time period.  Yep, you got us.  We have been killing it in Emergency Medicine to the tune of an extra 0.1% per year.  Over that same time period, United Health Care’s stock price went up an average of 37.6% per year.  Hmm, it makes you think that maybe the doctors aren’t the problem here, doesn’t it?


Yes, we need to address the bad apples that over-bill and take advantage of people who are at their most vulnerable.  There is no argument about that.  However, this one size fits all, overcompensating reaction by Congress and pushed by the insurance industry is not the answer.  A surprise billing law from Congress is likely to produce more harm than whatever good it does.


During this pandemic, we were once again reminded that our front-line health care workers are heroes.  There is no place closer to the front line than our hospital Emergency Rooms.  We need to be very careful and support these heroes.  If we don’t, and if we pass an ill-conceived piece of legislation, we might find that they are not there the next time we need them.


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Standing on the Bow of the Titanic

I’m sure many of you are tired of me railing on about Covid and how terrible it is.  Trust me; I am as tired of doing that as you are of hearing about it.  The problem is nothing seems to be working.  I feel like I am standing at the bow of the Titanic, screaming about the Iceberg in our path but not feeling the boat turn at all.  This pandemic and what we are about to go through is like getting run over by a Zamboni.  So many people saw this coming and tried to warn us.  Why didn’t we get out of the way?


Ok, so with that said, here is another attempt to get the message out.  One of the comments or questions I get way too often is, “How can a disease with a 1% Mortality rate shut down the Economy?”


There are two problems with this question. First, it ignores how alarming a 1% fatality rate really is.  Secondly, it only focuses on the fatality rate as if people either die or are 100% ok.  What about the people who get hospitalized and then recover after some time?


Let’s take a long hard look at the numbers.  Since the US has a population of 328,200,000 million people, here is what happens if we let the virus run its course and everyone gets infected.


  1. Over 3.2 million people would die. We have 21 states in this country whose population is less than 3.2 million people.


What about the people that survive?


  1. Over 62 million people will require hospitalization. That the entire population of California and Florida.


  1. 59 million people will have permanent heart damage


  1. 32 million people will have permanent lung damage


  1. 9.8 million people will have a stroke because of Covid-19


So, it is a big deal. It’s not a choice between saving lives and shutting down the economy. If this virus were to run its course and 3 million people died while 62 million people required a hospital stay, we wouldn’t have to worry about shutting down our economy. It would shut down on its own.


Even without everyone getting infected, we have a genuine threat of overloading our hospital and delivery system in many parts of this country.  The only thing worse than getting Covid and needing inpatient care to save your life is having that situation and not having a bed available or staff available to take care of you.


In the scenario above, 62 million people would need a hospital bed at one time or another.  If we assume, each one only stays in the hospital for a week, and the load is spread out over a full year, that still means that around 1.2 million people would be in a hospital bed at any one time.  The problem with this is we only have about 1 million total hospital beds in the country, and on any day, between 70% and 80% of them are in use for non-Covid patients.  That means we only have 200,000 to 300,000 beds available at any one time.  Where would we put the extra 1 million people?  Who is going to care for them?


So, the next time you get mad at your Governor or some other elected official for requiring that you wear a mask or closing your favorite bar,  consider the facts above. They don’t want to shut down the economy. They aren’t doing this for political reasons. They are making the decisions to shut things down because they have doctors and scientists making sure they know what would happen if they don’t.


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Front Line Health Care Workers

Now that the election is over, I want to shift everyone’s focus to something even more important.  I want to talk about the pandemic and, more specifically, the front-line health care workers who battle this virus every day.


This pandemic has taught us new terms like social distancing and herd immunity.  We have also learned about Covid fatigue.  After nine months of this virus, most if not all of us are suffering from Covid fatigue.  We are tired of not eating at our favorite restaurant.  We long for the ability to have parties and gatherings.  We want our kids back in school.  We want to see a movie in a theater again and travel for a vacation.  We are tired of looking at the same four walls, and like the election, we want this to be over.


For some of us, Covid fatigue involves losing a job, food insecurity, and unfortunately, the loss of a loved one.


Now think about the incredible fatigue that our front-line health care workers are feeling.  They have been battling this virus for more than nine months now.  In the beginning, there were concerns about having enough PPE and fighting a virus that no one knew much about.  Throughout the pandemic they have dealt with the fear of contracting Covid and then giving it to a loved one at home.  I know doctors who moved out of their houses into an apartment to not risk infecting their families.  The next time your spouse or kids are getting on your nerves, remember some people would gladly trade places with you.


As we got a handle on PPE supplies and how to treat the virus better, things started to look up.  We started getting ahead of the curve, and there seemed to be a light at the end of the tunnel.


Then as summer ended and we moved into fall, things started getting worse.  New cases started going up dramatically, which were followed several weeks later with massive spikes in hospitalizations.  For the front-line health care workers, this must-have seemed like one of those war moves where the troops repel the first wave attack only to see a second much larger wave coming after only a short break.  The troops are tired, and once again, they have to fight against a relentless and never-ending enemy.


The numbers are scary.  Right now, we have more people hospitalized because of Covid than at any other time during the pandemic.  What’s really scary is the lag between new cases and hospitalizations.  On average, there is about a 4-week lag from testing positive to being hospitalized.  That means the over 60,000 people in a hospital bed right now probably tested positive a month ago.  A month ago, we were seeing about 40,000 new cases a day.  Today the new case average is over three times that number at over 120,000 new cases a day.  That means that around Christmas, we could have 180,000 to 200,000 people in a hospital bed with Covid.


Ladies and Gentlemen, it doesn’t take an economist or a statistician to tell you that we don’t have that kind of excess capacity in hospital beds or people to staff them in our delivery system.  Our troops are tired.  They have fought this thing with the sort of bravery and commitment that would win them all medals on the battlefield.  Even with that, there will come the point where they get overrun.  There will come the point where no amount of effort or bravery will be able to stem the tide of overwhelming numbers.  People, we are hurtling toward point right now at breakneck speed.


What can we do?  First of all, we can follow the simple but effective advice of mask-wearing and social distancing.  We can avoid large social gatherings, and yes, that means Thanksgiving and Christmas.  We can give our support to these health care professionals in every way we can.  Simply put, we need to pitch in now and help them hold the line.


When we talk about “front line” health care workers, we need to keep in mind there is no fallback line of defense.  If our “front line” gets overrun, the next line of defense is you!  The next line of defense is people dying in hallways or alone at home.


Let’s pull together and give our health care delivery system all the help we can.


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Don’t hate the player. Hate the Game.

Recently there has been a great deal of anger aimed at insurance companies, primarily driven by their incredible increase in profits during this pandemic.  People who paint the insurance executives as greedy and heartless are missing a big part of the problem.  The insurance CEOs are just doing their job.  They are doing what they are paid to do, and to do anything else would violate the trust the shareholders/owners have a place in them.  At this point, I feel as though I should take a pause and make something clear; I am not defending insurance companies or their CEOs, far from it.  What I’m doing is pointing out the inherent flaw in the system.  Until we change the structure of what insurance companies do and how they make money, we will never fix the root problem.  It’s like getting angry at the fever and ignoring the virus causing it.


Let me explain.  The purpose of any for-profit company is to maximize the investment of the shareholders.  Hard Stop.  In a capitalistic economy, that is their job.  In most industries, the best way to maximize shareholders’ investment is to build a better product or produce better service.  In those industries, the incentive of the CEO is aligned with the benefits to the consumer.  Consider this.  In 2019 Apple made gross profits of $98 Billion.  Amazon had gross earnings of $149 Billion.  United Healthcare had an excellent year and produced revenues of $14 Billion.  So why are people angry with UHC when Amazon made ten times the profits?  Well, it’s because of what UHC has to do to make that money.  We don’t care as much about Apple and Amazon’s earnings because my iPhone is really cool and works so well, and it’s really great to get toilet paper delivered to my door the same day I order it!


United, and every other insurance company, catch heat because of the perverse incentives involved with health insurance that create the environment where what’s good for UHC’s profits are often bad for their consumers, at least some of their consumers.  What makes it worse is the consumers in question are sick.  The problem is the system, and it’s one that can and should be fixed.


The world of health insurance is unlike any other market.  First of all, the consumer of your service, in most cases, is not the purchaser of the service.  The employer is the actual purchaser of the service, but the patient/member is the consumer.  This creates a problem because the purchaser isn’t benefiting from the purchase, and because of that, is more interested in reducing the cost of the purchase than anything else.  Think about it this way.  I’m a car guy.  I love cars.  I am likely to pay more for a car than many other people.  That doesn’t bother me because I get the enjoyment of driving that car.  This would change dramatically if I had to buy a car for someone else.  A car that I don’t get to drive.  In that case, I want the cheapest car I can find.  I don’t care if the vehicle isn’t very nice or isn’t very safe because it’s not my car.  All I am doing is stroking a check, and that brings me no joy or value.  That’s how health care works.


Health care is also different in that the insurance is provided to everyone, but very few people use more in services than the insurance cost.  The market is very skewed.  We know that 5% of the people account for over 50% of all health care costs.  We also know that 50% of people consume less than 5% of the costs.  So, we pay for everyone’s insurance, but very few people use insurance to a great degree.  For those people, however, the costs are very high.  This creates bizarre financial incentives and disincentives for insurance companies called adverse selection.  Think of it this way.  If an insurance company could figure out a way to get the most expensive 5% of their members to leave and go to a different insurance company, they would reduce their expenses by 50% but only reduce their revenue by 5%.  Now it doesn’t take a Harvard MBA to know that any company that can cut expenses by 50% for only a 5% reduction in revenues becomes incredibly profitable.  The other incentive they have is not to attract these sick patients in the first place.  The challenge for a company in this situation is how to accomplish this goal.


Unfortunately, there is a way to keep some of these very sick patients from joining your insurance company while also getting some of your members to leave and go to a competitor plan.  This can be done because most of those expensive patients are chronically ill with diseases like MS that are lifelong.  Another similarity for most of these members is they typically use one or more expensive medications and require regular and frequent care.  So, if you want to avoid these patients in the first place and get the ones you already have to leave, the best strategy is to make their lives very difficult.  Payers do this with a whole tool chest of strategies.  Prior-authorizations, utilization management, pharmacy formularies, fail first medications policies, pre-certification requirements, the list goes on and on.  Each of these tools is designed to either deny, delay or change the care the patient’s doctor has prescribed and the patient’s needs.  Doing this helps control medical expenses, and more importantly, it can build a reputation for that payer as being difficult to deal with.  In this day and age of social media, virtual support groups, and real-time communication, it’s easy to see how quickly something like the “MS Community” could spread the word that one payer is very difficult to deal with, but another has a much easier process for getting the latest and greatest drug.


Unfortunately, this kind of communication and payer switching creates an environment that forces every payer to play the game in a never-ending process of not wanting to be patient-friendly, thereby attracting too many chronically ill patients.


At this point, you may be thinking, “well, that wouldn’t happen. Wouldn’t the employer get angry?”  Some may, but most won’t.  Remember, the employer is paying the bills; they aren’t the one with MS and receiving the service.  Besides, the payers have become very good at showing corporate CFO’s just how much money these activities save.  They have convinced the employers that management costs would skyrocket as doctors would start spending money like a drunk kid on spring break without this kind of heavy-handed utilization.  The problem is it’s just not true.  A Peterson-KFF study shows that private insurance spending on a per-enrollee basis has grown much faster than Medicare and Medicaid spending over the last ten years.  Wait, that’s not what they are telling the employers.  They are telling the employers that all of these UM activities are helping hold down costs.  Why would Medicare and Medicaid, which are mostly devoid of these tactics, grow at a slower pace?  Well, the answer is that these payer strategies are designed to aggravate the chronically ill to either not choose a specific payer and/or leave that payer for one more reason.

Further, many of these actions which delay care also cause unnecessary care and, as such, actually increase costs.  Take some of the fail first pharmacy protocols.  These make the doctor try a drug that they know isn’t going to work, and then once that fails, they get the medicine they needed all along.  Another example is the situation where a patient is stable on one medication and then switches carriers.  The new carrier often won’t approve the medication that is working for the patient and makes them start all over with the fail first, cheaper medication.  It’s easy to see how this kind of process for something like migraines could lead to unnecessary doctor visits or even trips to the ER as the patient goes from a situation where their condition has been well managed to one where they are back to square one with something they know won’t work.



Again, given the payer’s mission to maximize their shareholder’s investment, none of this should come as a surprise.  It also won’t be fixed until we fix the underlying systemic issues driving this behavior.  While moving to a single-payer, Medicare for all, kind of approach would solve this problem; it is likely to be a bridge too far.  Medicare for all will be tough to achieve and way too easy for detractors to shoot down.  Also, it creates other issues around provider compensation levels and tax realities that would need to be solved in order to make sure the cure isn’t worse than the disease.


So, if Medicare for all isn’t possible, how do we fix this?  The answer lies in understanding incentives and removing those incentives that produce lousy behavior while keeping those that produce the behaviors we are looking for.  In health insurance, that means getting rid of the payers’ abilities to do all the things we don’t like.  Get rid of prior-auth, pharmacy formularies, fail first drug policies, etc.  Get rid of the whole tool chest of UM actions that not only drive physicians crazy but increase administrative costs and delay needed care for patients.  You get rid of all of these by creating a set of national coverage policies and guidelines.  If a drug or a service is medically necessary, it should be medically necessary for everyone with the same condition.  It shouldn’t be available for some patients with some insurance companies and not others.  Once you create these national coverage policies, you make it illegal for any insurance company to delay or deny care covered by one of these policies.  We would also need to create a national exception process where doctors could request exceptions to the policy based on valid clinical evidence.  These exceptions would be reviewed by peer physicians without the financial incentive to deny care inappropriately.  Since all carriers would be playing by the same rules, none of them would be disadvantaged.  Also, since they were no longer spending their time and energy trying to compete on who could be the most challenging plan to deal with for MS patients, they could devote their energy to competing on the things we want them to compete on.  Things like claims payment timeliness and accuracy.  Efficiency in administrative costs, additional benefits, and wellness programs.  You know the things that actually benefit the consumer.


At this point, I can almost hear the cries of the detractors.  “This will increase costs!  We can’t afford this kind of open checkbook approach!”  In addition to the previous data about private insurance spending increasing faster than Medicare spending, I would ask you to consider the following.  It has been estimated that the administrative burden of prior authorization activities cost the US health care system between $23 and $31 billion annually.  That’s $23 to 31 billion dollars that could be used on, oh, I don’t know, some actual health care rather than a never-ending cycle of “mother may I” between your doctor and your insurance company.


So, before you get angry about the latest earnings report for some for-profit health insurance company, try to understand that they are just playing the game we created.  We can get mad at them all we want, but it won’t change until we change the rules of the game.  Now is the time to do that, and doing so will not only help us reduce costs, but it will also go a long way to helping patients get the care and treatment they need without having to jump through too many hoops.  I mean, it’s bad enough to have one of these diseases.  You shouldn’t have to run an insurance company UM gauntlet in addition to dealing with your illness.


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ACA and Medicare for All

There is an old saying, “Be careful what you wish for; you just might get it.”


In just a few weeks, this country will seat a new justice to the Supreme Court, hold an election and have the highest court in the land hear oral arguments to possibly throw out the largest piece of health care legislation since Medicare was created in 1965.  Each of these issues is emotionally charged and could have long-lasting impacts on this country in a very profound way.


Physicians are taught to weigh the benefits of treatment options with the side effects and long-term impacts.  That kind of thinking is sorely missing when you look at the court battle over the Affordable Care Act and what may happen as a result.


Let me stop right here.  This is not a biased piece to support the ACA or glorify its virtues.  Since the ACA was passed, I have been very consistent in evaluating the good things it did and where it went wrong.  What follows is just a real and possible scenario of what may happen due to the path we are already on and is a cautionary tale about focusing on one thing and forgetting the big picture.


Ok, with that out of the way.  Let’s play this scenario out, shall we?  Ok, let’s say the polls are right and Biden wins the white house.  Let’s say the polls are also correct, and the balance of the Senate shifts Democrat.  Shortly after the election, the supreme court hears the arguments on the ACA with the new conservative justice seating and part of the process.  Sometime after Biden takes the oath of office and the new Congress is seated, the high court, in a 5-4 vote with Chief Justice Roberts siding with the three liberal justices, throws out the ACA by ruling that the individual mandate is not only unconstitutional but also not able to be severed from the rest of the law.


Immediately 20 million Americans lose their insurance.  Insurance reform is no longer the law of the land, and neither is Medicaid expansion.  The Republicans have finally gotten their wish and killed Obama Care.  This is the part where I remind you of the opening.  Be careful of what you wish for; you just might get it.


The Democrats are in control of Congress, and they are angry.  Obama Care is no more, and the deciding vote was cast by a justice that they don’t think should have ever been seated.  Cries of hypocrisy and the knowledge that RBG would never have allowed this to happen fill the news cycle.  President Biden is pressured by the more progressive section of his party.  Senator Schumer, now in control of the Senate, starts legislation to end the filibuster.  The legislation passes on a pure party-line vote.  Speaker Pelosi allows Medicare for All legislation to be introduced in the house where it is quickly passed on another strict party-line vote.  The bill is sent to the Senate for consideration.


President Biden, who has never been in favor of Medicare for All, can’t get in front of this runaway train.  The Senate has a floor vote on the House bill, and it passes.  It’s not even the end of President Biden’s first 100 days, and he finds himself with a Medicare for All law on his desk and the cries of his party to sign the bill and stick it to the Republicans like they “stuck it to us.”  Biden signs the bill, and before you know it, we have universal health care, and the entire insurance industry has been destroyed.  I will pause while some of you cheer about the demise of the insurance industry.  Go ahead, get it out of your system.  I understand.


Now, as the dust settles, someone asks the intriguing question, “what have we just done?”


Well, the short answer is everyone in the country now has free health care.  To pass the bill quickly, we have decided that all doctors and hospitals will be paid at Medicare rates.  They will submit all claims to the government for processing.  Hurray!  We did it!  But wait, that’s not the end of the story.


On day two, someone else speaks up and asks two even better questions; “How are we going to pay for this, and what will happen to our doctors and hospitals?”   I will leave the question on how we pay for this because that would take a whole book and more economic analysis than I want to do right now. Instead, let’s focus on what happens to our doctors and hospitals.


The quick answer is they take it in the shorts.  Doctors and hospitals would take an immediate and crushing reduction in revenue.  A CBO study shows that, on average, doctors get paid 30% more than Medicare from insurance companies, and hospitals get paid an average of 80% more than Medicare from insurance companies.  These statistics may be understated, but even if they aren’t, can you tell me any industry or business that survives without dramatic changes if their revenue dropped by 30% to 80% over night?  I didn’t think so.


This kind of dramatic hit to revenue would cause many rural hospitals to fail, and the urban hospitals that did survive would have to change the way they provide care.  Expenses would have to be cut, and those cuts would hurt.


The same thing and worse would happen to doctors.  Again, expenses would have to be cut, and those cuts would impact patient care.  Also, large numbers of physicians would likely retire.  Remember that 42% of the practicing physicians in this country are over the age of 55.  If just half of them retired early, that would mean around 170,000 doctors were leaving practice.  Right now, about 25,000 doctors graduate medical school each year.  So, if we had a mass exodus of doctors to the tune of 170,000, it would take us seven years to replace them, and that is only if no more doctors retire during that seven years.


So, at a time when everyone has free health care, and demand for care and services inevitably go up, we could see hospitals close and a shortage of doctors.  Wait times go up, and the quality of care derived goes down.


Be careful what you ask for; you just might get it.


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The Trump Health Care Plan

I just read the 40-page Executive Order signed by President Trump outlining his “vision” for health care.  Here is what it says.


First of all, 35 of the 40 pages are just a list of all the incredible things he has already done.  It’s impressive how much of the health care problems he has already fixed.  In case you missed all of these, here are the incredible things he has already done.


  1. Produced temporary plans that are 60% cheaper, saving 500,000 people from being uninsured.
  2. Improved HSAs for 11 million employees, saving another 800,000 people from being uninsured.
  3. Created association plans covering another 400,000 individuals
  4. Lowered health care premiums in Wisconsin by 11%, Minnesota by 20%, and Maryland by 43%.
  5. Saved seniors $2.65 billion in lower Medicare premiums.


The list goes on and on.  This was all done despite being strapped with a terrible law (The ACA).  But the job is not done.  So, in the last five pages, the executive order lays out the President’s vision for the future.


Hold your breath; it’s a good one.


  1. Giving American’s more choice: “The Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services shall maintain and build upon existing actions and expand access to and options for affordable healthcare.”


Seriously, that’s what it says.  That’s it.  Sort of a “There will be more access because I say there will be more access!”


  1. Lowering Healthcare Costs for Americans: (a) “…shall maintain and build upon existing actions to expand access to affordable medicines.”(b)…. shall maintain and build upon existing actions to ensure consumers have access to meaningful prices and quality information prior to the delivery of care.”  “work with Congress to reach a legislative solution (to surprise billing) by December 31, 2020.  If a legislative solution is not reached by 12/31/2020, the Secretary of HHS shall take administrative action to prevent (surprise billing)”. – Note:  This is my favorite.  You see, we only get the solution if he wins the election. (c) “…. shall maintain and build upon the existing actions to reduce waste, fraud, and abuse in the health care system.”
  2. Provide Better Care to Americans:(a) “….shall maintain and build upon existing actions to improve the quality in delivery of care for veterans” (b)”….shall continue to promote medical innovations to find novel and improved treatments for Covid-19, Alzheimer’s disease, sickle cell disease, pediatric cancer, and other conditions threatening the well-being of Americans.”



That’s its friends.  His vision for the future of health care.  In summary, he will give us more choice, lower costs, improve care, and cure all the diseases we face right now.  Amazing!


This, to me, is a little like a football coach talking to his team before a big game and saying, “What we need to do is win on defense, win on offense and win on special teams.  The key will be to score points while keeping the other team from scoring points.  Now go out there and win!”


Oh, you know what wasn’t in the “actions” part of the executive order?  How he plans to deal with pre-existing conditions if the ACA is ruled unconstitutional.  There is only one line addressing that in the last five pages. “It has been and will continue to be the policy of the United States to give Americans seeking healthcare more choice, lower costs, and better care and to ensure that Americans with pre-existing conditions can obtain the insurance of their choice at affordable rates.”


Whew, well as long as that’s our “policy,” we are all going to be ok.  That was a close one.


Do you know what else wasn’t in the order anywhere?  His promise to send seniors each a $200 prescription drug coupon.  That didn’t make the final draft of the order he signed.  Maybe it’s because there are some serious questions about his ability to spend 7 billion dollars without congressional approval.  The administration says the money comes from savings that will be achieved from his “most favored nations” drug pricing proposal (which was also not outlined in the order).  That’s right, the President plans on spending 7 billion dollars to give $200 to seniors right before the election, and he plans on paying for it from savings achieved by a program that doesn’t exist.  Does anyone other than me see the problem with this?  Anyone?


So, there it is—the President’s “vision” on how to fix health care.  I don’t know about you, but I will sleep better tonight knowing we have that problem solved.  Good night moon.


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The Biden Health Care Plan


With the election just around the corner, I thought it might be useful to analyze the Biden Health Care plan and what it would mean for doctors.  Let me begin by saying this is not an endorsement or criticism of or for either candidate.  This is simply an analysis of the impact that the proposed Biden health care plan would have on our industry.


For this analysis, let’s assume Biden wins the election, the Democrats keep control of the House and take control of the Senate.  I want to make this assumption because some of these things have no possibility of being implemented if the Republicans control either the Senate or the House.


Ok, so with our scenario set, let’s look at what candidate Biden says he will do to address the problems we have in health care once he is President.


  1. Decrease the age for Medicare down to 60.  Candidate Biden has talked about being in favor of reducing the age for Medicare down to 60 and allowing people to choose between their employer’s coverage and Medicare.  One of the interesting impacts of this move would be to give some people a path for earlier retirement as some people continue to work purely for health care benefits.  To the extent that people retire earlier, it would lower the unemployment rate.  Businesses would like the ability to have their most expensive employees switch to Medicare and probably provide incentives to help.  So, what does this mean for doctors?  Well, it means a reduction in revenue for most doctors.  Most physicians get paid better by commercial insurance companies than they do by Medicare.   If you are getting say, 150% of Medicare from BCBS for a 61-year-old patient and they switch to Medicare, you will see that same patient but for less money.
  2. Add the Public Option to the Affordable Care Act. Candidate Biden wants to add a Government-run insurance company call the “Public Option” as an option for any individual purchasing on the exchanges.  This public option will most likely be a full network of physicians compensated at 100% of Medicare rates.  This will make this insurance very affordable.  What will this do for doctors?  Well, just like the reduction of the Medicare age, this will mean that some portion of your patients will switch from another carrier to this government option, and that will mean you will get paid less.  It will also put pressure on the other insurance carriers who have to compete with this public option to drive down their reimbursement to your practice.  This one could be a double whammy.
  3. Boost the ACA – Candidate Biden has several strategies to further boost and support the Affordable Care Act to help drive down the uninsured populations. On the one hand, having more people with coverage is good for doctors, but since these people are likely to come with lower reimbursement levels, it could be a net negative.
  4. End Surprise Billing – This may be the only thing that Candidate Biden and President Trump agree on. Both candidates have said they want to eliminate surprise billing.  What does this mean for doctors?  Well, for most specialties, not much.  However, for Anesthesia, Emergency Medicine, and Radiology, well for those specialties, it’s Game Over.  This will seriously damage, if not kill, independent groups in those specialties by giving incredible power to insurance companies.  If you think I am overreacting, consider this.  Several years ago, there was a change in reimbursement from Medicare that significantly impacted cardiologists.  Today over 70% of the practicing Cardiologists are employed by a hospital or delivery system.  The impact that a surprise billing law could have on hospital-based physicians could be worse than the event that drove Cardiologists into the arms of hospitals.  In case you are keeping score, that little move increased the cost of Cardiology.
  5. Drug Reform – Wait, we have something else that both Trump and Biden agree on. Both candidates want to reform our current system and go after the drug companies to reduce costs.  This one is not likely to impact doctors, and given the power of the drug companies, it may be the hardest one for Biden to accomplish.


So, in a world where Joe Biden becomes our next President, and his party has the majority in the House and the Senate, doctors’ bottom line is pretty bleak.  Several of his directives would reduce your revenue and pressure insurance companies to reduce your income further.  For hospital-based physicians, the picture gets even darker.


So, what should you do?  Since its Hurricane season, I will use this analogy.  Don’t wait for the Hurricane to arrive.  It’s tough to board up your windows in 100 mph winds.  The time to prepare is before the thing hits landfall.  Every medical practice should be running scenarios on how much revenue you could lose in all of this.  Take a look at your practice and calculate the revenue loss if 50% of your patients from the age of 60 to 65 convert to a Medicare payment level.  Calculate how much revenue loss would happen if 50% of your patients who get their insurance from the exchange convert to a Medicare payment level.  That will give you a good idea of what kind of revenue hole you may be looking at.  Then develop some plans on how you would respond.  What can you do to reduce expenses?  How can you make sure you attract more of the better paying commercial insurance population?  That is the kind of planning and preparation you should be doing now.


We got caught off guard and unprepared by COVID.  Don’t get caught off guard again by the election.


When and if President Trump releases any details on his health care plan, I will do the same analysis on a scenario where he wins re-election, and the Republicans control both bodies of Congress.


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Let’s Move Forward

Covid-19 became real for me on March 13th.  That is the day that I shut down my office and sent my people home.  That was six months ago.  What a long and challenging six months it has been.


We have learned a great deal in the last six months.  Our health care professionals have gained great knowledge about this virus works and how to combat it.  We have done incredible work in record time to develop not one but possibly three different vaccines that hold the hope of ending this crisis.  We have seen countless stories of essential workers putting themselves at significant risk to keep the rest of us healthy and supplied.  We have witnessed heartache as millions of people have lost their jobs.  We have seen small businesses close, never to open again.  We have seen almost 200,000 people in this country die from this virus. Nearly 600 of those were health care professionals working hard to try and treat those who had contracted the virus.


We have also seen a great divide in this country as some people seem determined to argue along mostly political lines about things that either shouldn’t be debatable or have no bearing on where we go from here.  I will point some fingers now and fully admit that I am guilty of some of the very things I am calling out.


Right now, six months into this crisis, anyone arguing over the value of wearing a mask or if this was a plot by China or if the fatality count is overstated should just stop.  All those people arguing over who said what in January or February, just stop.  Anyone suggesting that there is some deep state conspiracy here by either political party, just stop.  Stop it right now.  There are 200,000 Americans that would love to tell you why you should stop this nonsense, but they can’t.


Ok, let’s get this out once and for all.  This sucks!  No way around it.  It sucks for everyone involved.  I have told my kids that this is likely the worst thing they will ever experience.  Think about this, on 9/11; we lost about 3,000 American’s.  That was a very dark day and one we should never forget.  Over the last six months, we lost an average of 1,000 American’s every day.  That’s like having a 9/11 every three days for six months.  I know this isn’t good.  Everyone knows it’s terrible, and I am just as guilty as everyone else of wanting to find someone or something to blame.  I want a bad guy in all of this—someone I can hate and punish.  The problem is, there is no bad guy.  There is no villain dressed in black for us to despise.  The other problem with wanting someone to blame is it doesn’t help us move forward.


Now, I know that people will base their vote in November on what they think their Governor did or didn’t do.  I know people will consider the President’s response to COVID when they cast their ballot in November.  That’s great.  Please do.  I know I’m going to.


I’m not saying that you shouldn’t look back on how elected officials handled this crisis as part of your election decision making.  You should do that.  What I am saying is the arguments over silly things that aren’t going to change or help us get out of this mess are not only pointless but just widen the divide in this country.  Let’s all do what we did after 9/11.  Let’s pull together and find our way out of this dark time.  Let’s work on how to get our kids back in school safely.  Let’s work on opening the economy fully without increasing the number of people who will get this virus and die from it.  Let’s root for a vaccine.  Let’s become American’s again.


Thank you.


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