Saturday, July 11, 2015

Medicare Proposes Fixed Rates for Hip-Knee Replacements

New hip and knee fixed rates are Okay.

ObamaCare, after all, is here to stay.


Medicare plans to set fixed rates for hip and know replacements in 75 regions of the country. These rates for inpatient surgeries now vary from $16,000 to $32,000, with even more variable rates for rehabilitation care. In 2013, 400,000 hip and knee replacement ran a tab of more than $7 billion.

Fixed rates for hips and knees, federal logic goes would save the government $150 million over the 5 years from 2015 to 2020. The logic assumes all patients are the same, have the same causes of their joint ailments, are treated by doctors with same skills, and have the same outcomes and recovery periods. Therefore, rates ought to be same, regardless of the economic environment in which joints are replaced.

This fixation on fixed rates reflects the Obama adminisitration’s belief in the homogeneity of people and medical results and social equity- the same pay, same benefits, and same outcomes.

Providers who perform well, which I assume means more bang for the buck more “value” in modern jargon, will be rewarded with bonuses. Those who perform badly, costs beyond fixed rates, will be required to repay government part of the costs.

This federal fixation on fixing rates for hips and knees reminds me of George Orwell’s warning about totalitarian regimes in Animal Farm, “ All animals are equal, but some are more equal than others.” In this case, autocratic bureaucrats and more equal than autonomous providers. When the government owns the payment system, you have to follow the Piper.

I am not saving my breath worrying about the $150 million savings by 2020. The government is notorious for cost overruns. In 1965, it was said Medicare and Medicaid would not exceed $9 billion by 1990. In 2015, CMS costs will top $1 trillion. Government costs projectors lack 2020 vision. Besides by 2020, ObamaCare may be history

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