Newt’s Reform Ideas – 1b: More on Fraud

The second in a series reviewing the health policy proposals by Newt Gingrich as listed at the Center for Health Information.

 ♦ Part 1: Stop Paying the Crooks

We’ve been looking at the health care reform proposals recently put forth by Newt Gingrich at the Center for Health Information. Before moving on to the topic of computerized medical records, a few more points come to mind regarding the whole fraud and abuse problem and its proposed solution.

The real problem with the federal health care programs, the seed ground for the vast majority of the fraud problems in health care (and elsewhere), is complexity. Simple systems are hard to defraud. When you buy a box of cereal at the store, and pay the checkout gal your money, there’s no opportunity for fraud. If the IRS wanted to eliminate tax fraud, they would deep-six their hundreds of thousands of pages of regulations — which even an army of accountants and lawyers can’t decipher — and have a simple, one page, flat tax form: Here’s what I earned, send the Feds x%. Complexity in any realm — be it software development, business models, government and legislation (e.g. the 1000-page-and-growing health reform legislation being considered by the House, which John Conyers says no one will read, and, hey! no big deal!), vastly increases the opportunity for the dark side of human nature to find loopholes to benefit themselves — and creates deadly traps which even the most honest may be hard-pressed to avoid.

Our current health care reimbursement system is beyond complex — Medicare regulations in the Federal register are 3-4 times the size of the IRS tax code. (Lord knows what they will be if “reform” gets passed!) Chew on that for a moment. Such complexity engenders huge inefficiencies, and contradictory or nonsensical rules can make it all but impossible to comply, or even understand what they mean. They also engender a certain amount of moral hazard, even for the honest.

To wit: a prime example of this in medical coding and reimbursements is something called edits. I’ve explained these before, but in a nutshell they go like this: if certain sets of complex conditions are met, you get paid; if not, then no dice. For example, if you perform surgery A at the same time as surgery B (as they are related), Medicare or an insurance company may refuse to pay for either A or B, as they are bundled — that is, they are considered as one procedure for payment purposes, even though more time and complexity was involved to do both. Often this makes sense (since unbundling components of procedures was sometimes abused by fraudulent providers), but with increasingly frequency the exclusions are arbitrary, and have become vehicles for payers to cut costs by denying payment capriciously. Physicians who, quite legitimately, submit modifier codes (which may allow payment for both, if there is good reason) may also become targets of auditors ever on the search for “fraud,” since such a billing pattern may suggest they are trying to bilk the system.

And then there are the procedure / diagnosis code edits. If you submit a legitimate, medically-indicated service for payment, Medicare or the insurance companies may deny payment if they don’t like the diagnosis code (called ICD-9 codes) you used. Medicare is pretty transparent about which codes they will pay for, while insurance companies often are not (so-called “black-box” edits) — but in both circumstances the decision to pay or not for a given diagnosis is often utterly capricious and not at all medically-based. Savvy physicians and medical billers learn which codes pay, and which don’t — and since there may often be more than one diagnosis which is proper and ethical to use, one may get you paid while another may not. But this insanity also creates a temptation to push the envelope a bit, to receive payment for an entirely legitimate medical service — and yes, one determined to be so under peer-reviewed standards and outcomes research — by using other diagnosis codes which may not be quite as close to the most accurate clinical code. And even if it is entirely legitimate and ethical to change codes, the Feds view this coding-for-reimbursement as fraudulent.

So let’s say your patient has diabetes and high blood pressure. You perform some service to evaluate his high blood pressure. Medicare won’t pay for this service when submitted with the high blood pressure diagnosis code (even though it’s entirely appropriate medically and ethically to perform this service for high blood pressure) — but will pay for it when submitted with a diabetes diagnosis code. Since the service was legitimate and medically appropriate to provide for high blood pressure, and since the patient also has diabetes, you submit the service for payment with the diabetes code — and get paid. (This specific example is entirely fictitious and conjectural, BTW, used only for the sake of demonstration — but such code mismatch problems and incorrect denials are legion in health care billing). Technically, you are committing fraud if you do this; medically, you have done absolutely nothing wrong — the problem lies in the bizarre mismatch of payment edits and the mind-numbing complexity of the payment system. Many physicians play strictly by the rules — and as a result perform a lot of care without pay. Not a great business model by any stretch (since it’s not free to provide the care) — but preferred by many to the dreaded Federal auditor flashing his badge and demanding to see your ID as you check your patient’s prostate.

So the fraud problem is far more than a bunch of shady sheisters shilling the system for big bucks by billing for faux services. It’s also a lot of honest and hard working physicians who are struggling to understand and comply with an enormously complex payment system, fraught with egregious capriciousness which often denies payment for entirely legitimate services. It creates a morally hazardous environment which can easily push physicians into areas of ethical grayness — or worse — when they are arbitrarily denied fair payment for legitimate and medically-appropriate care.

Enough for now on the fraud issue — although I could go on much longer. As long as the payment system remains phenomenally complex, you will have fraud — whether real or simply perceived by payors. And there is no serious consideration in any current proposals to reform this monetary madhouse. You cannot eliminate fraud in such a complex system without turning your medical payment bureaucracy into a police state — and punishing, and driving out even more honest, competent physicians from their profession. Can you say, “Access problems”, boys and girls? But then, if we’re left with no doctors standing, no doubt “fraud” will decrease, substantially.

Anyway, time to move on to part 2, on computerized medical records.