Medicare - Decoupling of Medicare Fees and Doctor Practice Expenses

A recent blog of mine evoked this response from Robert Teague, MD, an Austin, Texas pulmonologist. He serves as CEO of PracticeIT. com, a firm devoted to making sense out of information technologies for physicians.


I enjoyed your piece in Health Leaders this morning. You clearly have your hands around many of the complexities of the issue.

Here are a few ideas I think are hugely relevant to allowing some of your other elements to work:

• The health system can never be fixed until the financial and service transactions occur between the same two people.

• The “cost of production” of care is actually unknown ever since the government decoupled price from cost of production 40+ years ago. This will only be rectified by number one.

• Address regulation. I believe when history of health care in this epoch is writ it will show that the Stark Laws did more to inhibit point of service innovation than any other single factor. Through some well intentioned legislation we have horrific unintended results. The people with the greatest natural interest in point of service innovation are physicians. They are also the ones with the means both financially and intellectually to do it. But are prohibited from doing it by these ridiculous restrictions on innovation. It is not by chance that the patient/customer experience deterioration in health care delivery roughly parallels the passage of these stupid laws.

• Finally, add a line to HIPAA... one sentence will do... HIPAA established that personal health information “belongs” to the individual. HIPAA also supports that notion that those who store this information on any type of media (paper or electronic) own the media if not the information per se... all the sentence has to say is “any health provider who stores personal health information must on demand make it available to the owner electronically or on paper as requested.” Something along these lines would make RHIO’s go away as unnecessary and spur the adoption of connectivity of information in a way that will likely not occur otherwise.

I concur with Dr. Teague on his major points:

1) Third parties – Medicare and health plans – distort and complicate normal business relationships. In their book, Guide to Physician Recruiting, Merritt, Hawkins, and Associates put it this way:

2) Stark laws are “stupid” in that they prevent innovation at the point of care by making physicians go through the expensive exercise of jumping through unnecessary legal hoops Furthermore they prohibit collaboration between physicians and between physicians and hospitals and impede normal market transactions. In my book Innovation-Driven Health Care. Brooks ONeil, a health care analyst, put it this way:

The regulatory environment has got to change to allow innovations to occur. We’ve got to open up Stark, eliminate corporate practice laws, eliminate Certificate of Need, and eliminate a few other things, too.

3) HIPPA would work better if health providers would cough up personal information on personal demand by patients.

Patients deserve know their personal data, no matter where it’s stored.

4) Medicare payments bear no relation to the cost of doing business.

The cost of doing business is higher in fast growing rural areas near urban centers. It’s about time Medicare acknowledged this and did something about it.

Her are a few counties in which Medicare is underpaying.

State and Counties, Percent of Underpayment

Arkansas, Crittenden, 6.9%
California, Santa Cruz, 10.2%
Colorado, Denver, 5.2%
Connecticut, Fairfield, 3.7%
Delaware, New Castle, 3.7%
Georgia, Barrow, Bartow, Carroll, Coweta, Pickens, Spalding, 12.0%
Illinois, McHenry, 11.3%
Iowa, Dallas, Polk, Warren, 4.7%
Kansas, Miami, Johnson, Leavenworth, 5.9%
Kentucky, Kenton, 5.0%
Louisiana, St. Charles Parish, 5.4%
Maryland, Calvert, 11.4%
Massachusetts, Essex, 6.7%
Michigan, Livingston, 5.4%
Minnesota, Dakota, 6.0%
Missouri, Cass, Clinton, Lafayette, Ray, 11.0%
Nebraska, Cass, Douglas, Sarpey, 3.9%
New Hamsphire, Hillsborough, 3.4%
New Mexico, Los Alamos, Sante Fe, 8.9%
New York, Putnam, 8.3%
North Carolina, Chatham, Durham, Franklin, Johnston, Orange, Wake, 6.5%
Ohio, Cuyohoga, 4.9%
South Dakota, Lincoln, Minnehaha, 3.4%
Texas, Collin, 11.5%
Utah, Davis, Weber, 2,4%
Vermount, Chittenden, 3,2%
Virginia, Manassas City, 14.4%
Washington, Snohomish, 6.3%
Wisconsin, Pierce, St. Croix, 10.4%
West Virginia, Jefferson, 5.2%

The moral is that government can’t adjust to changes taking place on the ground. By so doing they financially undercut doctors, and the Medicare patients they serve.