Newt’s Reform Ideas 1 — Stop Paying the Crooks

Over at the Center for Health Information (HT: Hot Air), Newt Gingrich and Nancy Desmond have proposed a series of principles for reforming our health care system, to wit:

1. Stop Paying the Crooks. First, we must dramatically reduce healthcare fraud within our current healthcare system. Outright fraud — criminal activity — accounts for as much as 10 percent of all healthcare spending. That is more than $200 billion every year. Medicare alone could account for as much as $40 billion a year.

2. Move from a Paper-based to an Electronic Health System. As it stands now, it is simply impossible to keep up with fraud in a paper-based system. An electronic system would free tens of billions of dollars to be spent on investing on the kind of modern system that will transform healthcare. In addition, it would dramatically increase our ability to eliminate costly medical errors and to accelerate the adoption of new solutions and breakthroughs.

3. Tax Reform. The savings realized through very deliberately and very systematically eliminating fraud could be used to provide tax incentives and vouchers that would help cover those Americans who currently can \'t afford coverage. In addition, we need to expand tax incentives for insurance provided by small employers and the self-employed. Finally, elimination of capital gains taxes for investments in health-solution companies can greatly impact the creation advancement of new solutions that create better health at lower cost.

4. Create a Health-Based Health System. In essence, we must create a system that focuses on improving individual health. The best way to accomplish this is to find out what solutions are actually working today that save lives and save money and then design public policy to encourage their widespread adoption. For example, according to the Dartmouth Health Atlas, if the 6,000 hospitals in the country provided the same standard of care of the Intermountain or Mayo health clinics, Medicare alone would save 30 percent of total spending every year. We need to make best practices the minimum practice. We need the federal government and other healthcare stakeholders to consistently migrate to best practices that ensure quality, safety and better outcomes.

5. Reform Our Health Justice System. Currently, the U.S. civil justice system is the most expensive in the world — about double the average cost in virtually every other industrialized nation. But for all of the money spent, our civil justice system neither effectively compensates persons injured from medical negligence nor encourages the elimination of medical errors. Because physicians fear malpractice suits, defensive medicine (redundant, wasteful treatment designed to avoid lawsuits, not treat the patient) has become pervasive. CHT is developing a number of bold health-justice reforms including a “safe harbor” for physicians who followed clinical best practices in the treatment of a patient. Visit CHT’s Health Justice project page to learn more.

6. Invest in Scientific Research and Breakthroughs. We must accelerate and focus national efforts, re-engineer care delivery, and ultimately prevent diseases such as Alzheimer’s Disease and diabetes which are financially crippling our healthcare system.

My first reaction to this? Meh. Obamacare light.

On deeper reflection, however: Mini-meh. Not entirely without merit, but loaded with silliness and false assumptions.

What is it with these so-called policy gurus? Knowing little or nothing about how health care really works, they haul out the bromides and throw around statistics based on taking small numbers and projecting them across large populations, to come up with scary percentages which then echo around the web and inside the hollow heads of the parrots in media newsrooms. Oh, and our politicians then use this crapola to formulate policies, which always end up having massive unintended consequences and which never achieve the results promised. Newt’s a pretty bright guy — generally a far better idea man than a politician — but he’s whiffing at softballs thrown slowly, by and large, with this one.

So what’s my gripe? Where do I begin? How about at the beginning?

 ♦ Stop Paying the Crooks: Of course, brain-dead easy. Just find ’em and lock ’em up. Problem solved; billions saved; next problem!

Not quite so easy, in reality.

Look, fraud exists in Federal programs; it may actually be a pretty large chunk of change, although I’m more than a bit skeptical of the numbers being tossed around. Why? Well, first, if we knew exactly how much fraud there was in Federal health programs, we would, you know, go after it, no? All these numbers are nothing but projections — and projections based rather thinly on hard data, then amplified by applying them to large populations. Great for media play and making a political point, but invariably far, far off the mark.

Ever hear those public service ads which generate guilt by saying “One in five kids will go to bed hungry tonight in America.” Believe them? Of course not — they’re ludicrous on their face (unless you count the corpulent kids whose last Big Mac was 2 hours before bedtime…) . The gimmick used is non-representative sampling — and sampling is a huge problem: if 2% of physicians are found fraudulent in Miami, does that mean 2% are crooks in Topeka, or Flagstaff, or East Podunk? Highly unlikely — but that’s how these estimates are typically generated. So the line goes, “Eliminate fraud and we can have XX billion dollars to spend on such-and-such!” End result? There’s never as much fraud as you say (and a good deal of it is impossible to track down), and the promised billions never materialize.

Next problem is definitions: to paraphrase Bill Clinton, it depends on what the meaning of “is”, is — how exactly are you defining fraud?

Sure, no one argues with the dude who steals or fabricates a provider number, then bills Medicare for millions of dollars of non-existent medical services (although it is surprising how long it takes Medicare to catch on to such schemes). Some are almost as clever as politicians at stealing money. Bust ’em, lock ’em up, problem solved.

But what about the honest doc utterly befuddled, or too busy to spend half her time on, the mind-boggling complexity of medical service coding? Or the solo practitioner who can’t afford the huge hassle and administrative costs and burdens of a full-fledged compliance program? In the world of Medicare & Medicaid, such providers are also fraudulent. Try to be charitable to a poor Medicare patient and not bill them for their copay and deductible?

Fraud! Honest to God.

When physicians hear about new measures to stamp out fraud and abuse, they know exactly what that means: federal auditors, not health care professionals but bureaucrats, with infinitely deep pockets and unlimited time, sweeping into a busy medical practice, demanding hundreds of charts to review, disputing countless interpretations of complex, confusing, vague, and often contradictory regulations on what code should have been charged for such-and-such a service, with mind-boggling penalties per offense, no matter how trivial. Be prepared for a 6-figure attorney bill, on your dime, with little or no formal avenue for review or appeal — and still expect to settle in the end, hopefully for less than a mil.

Oh, and that settlement will become part of the national fraud statistics, finding some convenient multiplier, and generate some more truly shocking numbers about crooked doctors — when the chances are rather high in reality that that no real fraud occurred.

There is a pretty simple way to vastly reduce such fraud, of course: pay physicians by time, like virtually every other profession. Kill the complex coding system which by its very complexity breeds fraud, error, and confusion.

Will it ever happen? When Skip Gates dons a white hooded cape and burns crosses on lawns.

Human nature being what it is, you will never completely eliminate fraud. But you sure can crush a profession by trying.

There’s lots more to come, not all critical. Next post: Newt Part II: Move from a Paper-based to an Electronic Health System.

Back soon.

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3 thoughts on “Newt’s Reform Ideas 1 — Stop Paying the Crooks

  1. Newt has an innovative solution to every human problem — neat, plausible, and wrong. In a way, he scares me more than Obama, whose ideas are neither neat nor plausible; so as his shine wears off, they’re increasingly recognized as wrong.

    Don’t get me wrong, I like Newt. He’s always interesting, and he’s good at countering lefty idiocy. But he belongs with the other wonks, on C-SPAN or in National Review. You know, some place harmless. Keep him the heck away from Congress and the White House.

  2. As a former medical coder, I can vouch for what you say.

    If the feds can find any possible way to make something more complicated than it has to be, they’ll use it.

    And they want to run health care?

    Mercy!

  3. I’m a small business man, in an engineering consulting firm that sells diagnositic and troubleshooting services. In a sense we sell fee-for service products much like an MD (and tests and scans as well). I also buy medical insurance for the firm.

    My first conclusion is that most medical bills (as in MD hourly charges) are pretty tightly constrained for the experience/services provided. This is based on my rates/costs for providing my services.

    My second conclusion is that I have a very limited market for obtaining health insurance for our firm (

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