An Example of Why Healthcare Costs Keep Rising and Why We Pay

Here is a chilling  healthcare mystery as told by the Wall Street Journal

Somewhere in the New York City area there is a family-practice doctor who, government records suggest, pocketed more than $2 million in 2008 from Medicare, the federal insurance program for the elderly.That made her one of the best-paid family-medicine physicians in the Medicare system. But more noteworthy than the sum is her pattern of billing, which strongly suggests abuse or even outright fraud, according to experts who have examined her records.This doctor didn't do typical family medicine. Instead, she administered a wide array of sophisticated tests, including polysomnography sleep analyses, nerve conduction probes and needle electromyography procedures—some of which have been flagged by federal antifraud authorities for special scrutiny. As a doctor of osteopathy, she has certifications for family practice and a hands-on treatment called "manipulative therapy," but none in neurology. She denies wrongdoing.

 We can find the criminals but our hands are tied

The Wall Street Journal is prohibited from naming this physician despite the fact that the paper detected her by mining a database paid for by taxpayers. Known as the Medicare claims database, it is a computerized record of the bills Medicare pays for medical treatment, and it is widely considered the single best source of information on the U.S. health-care system. Federal investigators use the database to find fraud; academic researchers mine it to compare the cost and utilization of various services; and consultants make a business out of analyzing the data for a wide variety of health-care companies. In ways large and small, it offers an unparalleled look at why America's health-care costs are spiraling.For instance, a background check of the 25 other doctors in the nation who performed more than 20 of the same sophisticated tests as the New York-area physician shows that six have links to alleged fraud or have run into professional trouble. Two were charged this year with Medicare fraud, and two others worked in the same company as the defendants. Another has been sued by an insurance company for billing fraud.

Looks like we'll keep paying for the criminals

But the Medicare data come with a severe limitation: While the services and earnings of hospitals and other institutional providers can be publicly identified, such information is kept strictly confidential for doctors and other individual providers. The reason is that the American Medical Association, the doctors' trade group, successfully sued the government more than three decades ago to keep secret how much money individual physicians receive from Medicare. The AMA has continued to defend this ruling, including in two cases in which federal appeals courts issued decisions last year.This means the American public is barred from examining in detail how Medicare spends roughly an eighth of its funds, about $62.5 billion in 2009. While that may seem like a small piece, health-care experts point out that physicians have disproportionate power to direct spending in all the other areas of the system because they admit patients into hospitals, prescribe drugs and order procedures and equipment.

About the Author: Ed Teixeira has over 35 years of franchise industry experience as a franchise executive and franchisee. He has served as a franchise executive in the c-store, manufacturing and home healthcare industries and has licensed franchises in Asia, Europe and South America. Ed operates FranchiseKnowHow  which provides information and advice to prospective and existing franchisees and franchisors. He publishes newsletters for the franchise community.