American Sickness by Elisabeth Rosenthal

INTRODUCTION

  • The US spends nearly 20 percent of its GDP on healthcare
  • The US delivers worse outcomes than nearly all developed countries, all of which spend about half of what we do per person.

ECONOMIC RULES OF THE DYSFUNCTIONAL MEDICAL MARKET

  1. More treatment is always better. Default to the most expensive option.
  2. A lifetime of treatment is preferable to a cure.
  3. Amenities and marketing matter more than good care.
  4. As technologies age, prices can rise rather than fall.
  5. There is no free choice. Patients are stuck. And they’re stuck buying American.
  6. More competitors vying for business doesn’t mean better prices; it can drive prices up, not down.
  7. Economies of scale don’t translate to lower prices. With their market power, big providers can simply demand more.
  8. There is no such thing as a fixed price for a procedure or test. And the uninsured pay the highest prices of all.
  9. There are no standards for billing. There’s money to be made in billing for anything and everything.
  10. Prices will rise to whatever the market will bear.

CH 1. THE AGE OF INSURANCE

  • Earliest forms of insurance (Dallas TX, Blue Cross) were catastrophic insurance meant to protect patient savings and keep hospitals afloat, not to make money.
  • In postwar America, for-profit insurance companies entered the market, gaining market share in the 1970s and 1980s with aggressive marketing and closer ties to business.
  • Blue Cross Shield became WellPoint and then Anthem Blue Cross.
  • Once acceptance of health insurance was widespread, a domino effect ensued: hospitals adapted to its financial incentives, which changed how doctors practiced medicine, which revolutionized the types of drugs and devices that manufacturers made and marketed. The money chase was on: no one was protecting the patients.

CH 2. THE AGE OF HOSPITALS

  • The cost of hospital services has grown faster than costs in other parts of the healthcare system.
  • Because most hospitals are nonprofit institutions, they have no shareholders to answer to and cannot legally show a “profit”; therefore, they spend excess income on executive compensation and building Zen gardens and marble lobbies.
  • Eight of the ten largest nonprofit hospital systems in the United States have religious affiliations and names. Healthcare has become a great way for the Catholic Church, in particular, to collect money.
  • Because patients were no longer directly forking out cash or writing checks for their care, hospitals began charging more for their services. No one really knew how to figure out how much it cost the hospital. But there was no harm in charging high, because insurers usually paid whatever was requested.
  • Successful HMOs took permanent root in a few markets, most notably Kaiser Permanente in California. But overall patients hated them, in part because so many were hastily designed and poorly managed.
  • Today just about every hospital employs strategic billing, which is enabled and supported by consultants and healthcare advisory firms,
  • There was financial incentive: colleagues who were upcoding expansively could make twice as much—over $300,000 instead of $170,000.
  • Insurers, particularly Medicare, tried to prevent upcoding by spot audits of charts, but hospitals provided helpful assistance to doctors.
  • Facility fees provided a great incentive to stop performing any and all procedures in doctors’ offices and instead use a surgicenter or a hospital outpatient department.
  • As departments underwent financial review, hospitals did away with loss leaders (emergency rooms, labor and delivery, dialysis centers, drug treatment programs) and enhanced their most profitable offerings: orthopedics, cardiac care, a stroke center (revenue from expensive scans), and cancer care (revenue from infusions).
  • Companies, hospitals, and doctors’ groups lobbied successfully to have insurers pay for obesity treatments.
  • Hospitals have turned residencies into another profitable business. Federal support translates into about $100,000 per resident per year. Researchers have calculated that the value of the work each resident performs annually is $232,726.
  • Hospitals have become ever more opulent and their executives earn Wall Street–size salaries.
  • Nearly all prestigious American medical centers pay almost no U.S. property or payroll taxes.
  • But as observation has become less important for diagnosis, it has become more important as a lucrative billing construct, manipulated by hospitals, insurers, and nursing homes. The easy money for Medicare patients is not in inpatient admissions. It’s in observation.

CH 3. THE AGE OF PHYSICIANS

  • Doctors make more in the United States than in other countries.
  • Medical school is free or cheap in many other countries.
  • Huge debts no doubt influence medical students’ choice of fields.
  • Perhaps in this age of industrialized medicine, doctors are merely looking for dollars to compensate what has been lost from the profession, the joy of getting to know your patients.
  • Anyway, as the numbers and salaries of hospital administrators were vaulting upward, the doctors wanted in on the profits.
  • Three times a year an AMA committee called the Relative Value Scale Update Committee (RUC) meets to adjust the value of codes in a highly vituperative meeting.
  • Ambulatory surgery centers (ASCs) became increasingly popular as doctors saw new income potential, because they could charge “facility fees”—essentially room rentals. The centers themselves do not participate in any insurance networks, so the facility fees are not constrained by insurers’ negotiated rates.
  • Pathologists, anesthesiologists, radiologists, and emergency medicine docs. The first three are often referred to as the NPC (“no patient contact”) specialists. Today they account for some of the highest, most confusing doctors’ bills you’re likely to get. Doctors could charge what they felt they were worth. But for patients, this meant the proliferation of separate bills for these doctors.
  • extenders. Physician extender is an umbrella term that refers to the trained ancillary personnel who help doctors and surgeons care for patients, including nurse-practitioners, surgical technicians, physician assistants, and midwives. These extenders can allow hospitals to bill from both the doctor and the extender using the same billing codes for the same amount.
  • In the United States oral prescription drugs are legally dispensed only in pharmacies. But there are an increasing number of intravenous and injectable drugs that, with outpatient medicine flourishing, could now be administered in doctors’ offices for a fee and with a markup.
  • Today nephrologists are performing the delicate operation of “vascular access” and taking in the revenue, though they often have little or no formal surgical training,
  • “People had a lot of faith in the American medical profession—that they would act differently than other businesses—but they were wrong.” Meanwhile, doctors who have not commercialized their practice are today at risk of extinction.

CH 4. THE AGE OF PHARMACEUTICALS

  • The Pharmaceutical Research and Manufacturers of America (PhRMA), the industry’s powerful trade group, calls pharmaceuticals our country’s most competitive industry. More competitors vying for business doesn’t mean better prices; it can drive prices up, not down.)
  • Court battles over patents now precede (and delay) each generic entry, driving prices up in the process.
  • Starting with AZT, drugmakers no longer had to show that their product actually cured the symptoms of illness over months or years or extended life. Instead they could measure things like blood markers.
  • Direct-to-consumer drug advertising rose from $166 million in 1993 to $4.2 billion in 2005. We are one of two countries that allow it, along with New Zealand. Media companies, and particularly cable television stations, are ever more dependent on it for survival.
  • FDA panels don’t consider the cost of the products they review.
  • Tactics used by drug manufacturers: file a lawsuit, modify the delivery, manipulate FDA loopholes, go OTC, create a new combination.
  • Drug companies invented “co-pay assistance,” a unique form of self-interested corporate charity to cover patients’ co-payments—a “donation”—so that the manufacturers can continue to submit bills for the full price of the drug to insurers.
  • Patient Access Network defines its mission as “a society where every individual can access needed medical care.” It describes its method as “helping underinsured patients access needed medical treatment through copay assistance.” PAN brags that it does almost no fund-raising, but it received more than $300 million in donations in 2013.
  • PBMs (Caremark CVS, Express Scripts) are huge, for-profit companies that make money by pocketing a percentage of the discounts they negotiate.
  • Shortages of cheaper, affordable essential medicines in hospitals have become the new normal, with newer, more expensive being introduced and supply controlled by drug manufacturers.
  • Cost-saving new treatments (cologuard, meningitis B vaccine) exist in other countries but have had a maddeningly hard time finding their way into the American system.

CH 5. THE AGE OF MEDICAL DEVICES

  • Device manufacturers are a tight-knit oligopoly with nearly absolute control of distribution.
  • Today there is generally far less careful scrutiny of new devices than of new drugs.
  • When claiming “substantial equivalence,” manufacturers don’t have to prove that their class 1 and class 2 products are “safe and effective.”
  • By the 1990s, many hospitals and doctors’ offices had banned pharmaceutical salespeople or limited their access, but device makers couldn’t be ejected so easily.
  • There is no free choice. Patients are stuck. And they’re stuck buying American. Doctors are too.

CH 6. THE AGE OF TESTING AND ANCILLARY SERVICES

  • Testing, medical equipment, and ancillary services became to hospitals and clinics what booze is to restaurants: high-profit-margin items that can be billed for nearly any amount. Better still, many insurers require no co-pay for these items once patients have met their deductible, so most patients don’t care how much they cost.
  • Doctors (perhaps) and the hospital (definitely) directly profited from the ordering of more MRIs.
  • Some hospitals automate ordering based on the patient’s initial complaint.
  • Extensive preoperative testing is a particular boon for hospital budgets because those tests are often done on an outpatient basis.
  • Professional ambulance services are relatively new to American healthcare. They have great leeway in deciding where to take patients.
  • Like the PARE doctors, many ambulance companies now refuse to contract with any insurers because they consider their negotiated rates too low. That leaves patients with big bills.
  • As ancillary services became increasingly commercialized—profit centers that hospitals and doctors looked to for new revenue—physical therapy practices fought for insurance coverage, charging minute by minute and item by item. By 2014 physical therapy was a $26.6 billion enterprise.
  • Home evaluation companies like CenseoHealth are a new kind of investor-owned healthcare business that has thrived in the past five years. The companies say their home visits are good for the elderly and that they report problems to patients’ primary care doctors. Their business model also increases reimbursement.
  • Well-insured Americans suffer often from too much treatment—particularly as they age—with tests and services meted out not for health but for money.

CH 7. THE AGE OF CONTRACTORS

  • There are no standards for billing. There’s money to be made in billing for anything and everything.)
  • “Codes are critical to understanding the fair and reasonable value of the charges and required by all third party and governmental payers. NO CODES=NO PAY.”
  • The coders who work for hospitals strive to get money. The coders employed by insurers try to deny claims as overreaching. Coders who audit Medicare charts look for abuses that need to be punished.
  • Many companies that advocate for patients also make good business by providing price information to hospitals, doctors, and insurers, who want to know how much their competitors are receiving for medical encounters, after negotiations.

CH 8. THE AGE OF RESEARCH

  • A lifetime of treatment is preferable to a cure.
  • In today’s healthcare system, research to cure a disease gets less support than research for more treatments.
  • Many disease foundations invest in drug, device, and biotech companies that strive to maximize profits not patient well-being.
  • The AMA has been called the strong trade union in America. The AMA owns the copyrights to the CPT codes. Recently the AMA has shown more social inclinations.
  • Specialists lobbies also wield significant power.

CH 9. THE AGE OF CONGLOMERATES

  • One big reason hospital systems are able to charge so much in what is supposedly a market-based system is consolidation.
  • The major effect of consolidation was simply a huge rise in prices, economic research has now shown, because hospital conglomerates that have driven out competition can raise prices with abandon.
  • Growing health systems often effectively protect their market by controlling electronic medical records (EMR), which are designed not to talk to other systems easily.
  • Hospital systems have been aggressively acquiring not just other hospitals and X-ray centers but doctors’ offices as well. “These hospitals and these offices that pretend to be hospitals are charging a facility fee the patient doesn’t need.”

CH 10. THE AGE OF HEALTHCARE AS PURE BUSINESS

  • By 2014, 52 percent of overdue debt on credit reports was due to medical bills and one in five Americans had medical debt on their credit record.
  • Hemophilia is a rare disease, but pricing for factor VIII is symptomatic of a nearly ubiquitous problem: we—and our employers and insurers—are shopping for healthcare in a market where everything is monetized to the maximum, without much regard for the implications for patient health.

CH 11. THE AGE OF THE AFFORDABLE CARE ACT (ACA)

  • One of the laudable requirements of the Affordable Care Act is that certain preventive tests, including colonoscopy screening, should be free to patients.
  • Even the well-intentioned provisions that managed to survive the tortuous congressional negotiations over the ACA have been in practice diluted and perverted, as providers find ways to maximize revenue by gaming its rules.
  • It created some important incentives but ACA did little directly, however, to control runaway spending.
  • By 2016 some large insurers announced they would no longer offer ACA plans because they were losing money on them. Others sought premium rises of 40 to over 60 percent on some types of plans.

CH 12. THE HIGH PRICE OF PATIENT COMPLACENCY

  • We’re numb to statistics about medical debt being the single biggest cause of bankruptcy in the United States.
  • Why other countries have more cost-effective healthcare: fee schedules and national price negotiations, single payer, market based tools of transparency and competition.

CH 13. DOCTOR’S BILLS

  • Ask why your doctor is ordering a particular test.
  • Challenge those large numbers on your bill.
  • Is the practice owned by a hospital or licensed as a surgery center?
  • Will you refer me only to other physicians in my insurance network, or explain why in advance if you can’t?
  • If I need blood work or radiology testing, can you send me to an in-network lab?
  • Will there be charges for phone advice or filling out forms? Is there an annual practice fee?
  • If I’m hospitalized, will you be seeing me in the hospital? What is your coverage on weekends?
  • How much will this test/surgery/exam cost?
  • How will this test/surgery/exam change my treatment?
  • Which blood test are you ordering? What X-ray? Why?
  • Are there cheaper alternatives that are equally good, or nearly so?
  • Where will this test/surgery/exam be performed—at the hospital, at a surgery center, or in the office—and how does the place impact the price?
  • Who else will be involved in my treatment? Will I be getting a separate bill from another provider? Can you recommend someone in my insurance network?
  • Don’t rush to the doctor. Give your body a chance to heal. Start with some advice from a pharmacist (their knowledge is terribly underutilized in our system).
  • In training, doctors are generally taught little to nothing about the cost of healthcare. It should be considered a doctor’s obligation to provide you with financial information. That includes, at the very least, a cash price list of services rendered in the office.
  • Prices should be included on order sheets or, at the very least, hospitals should provide medical staff with their master price list—the chargemaster—so they can educate themselves about what services the hospital charges for and how much.

CH 14. HOSPITAL BILLS

  • Patients are often too loyal to a particular hospital.
  • Start vetting local hospitals before you are ill. U.S. News & World Report’s Best Hospitals rankings. The nonprofit Leapfrog Group grades all general hospitals on patient safety on a scale of A to F. Medicare’s young online Hospital Compare program provides data on all 3,600 hospitals that take Medicare payments. Check one of several Web sites that provide free downloads of your hospital’s IRS Form 990
  • Hospitals have built a huge oversupply of private rooms, though insurers frequently won’t cover their cost. If you are assigned to a private room, make it clear that you did not request it and would be happy to occupy a room with another patient.
  • In the pages of admitting documents you’ll have to sign, there is inevitably one concerning your willingness to accept financial responsibility for charges not covered by your insurer. Before you sign, write in “as long as the providers are in my insurance network.”
  • Be clear on the terms of your stay in the hospital: Are you being admitted or held under “observation status”? Ask point-blank. The answer will have big implications for your wallet.
  • If you’re feeling well enough, ask to know the identity of every unfamiliar person who appears at your bedside, what he or she is doing, and who sent him or her. If you’re too ill, ask a companion to serve as gatekeeper and guard. Write it all down. Beware the nice doctor who stands at the foot of your bed each day and asks if everything’s going OK. That pleasantry may constitute a $700 consultation.
  • If the hospital tries to send you home with equipment you don’t need, refuse it, even if it’s “covered by your insurance.”
  • If you receive an outrageous bill from a hospital, a testing center, or a medical office, don’t wait—negotiate! Prices are so inflated that even low-level clerks are often authorized to approve major discounts.
  • When a hospital bill arrives in the mail, request complete itemization.
  • Check the bill against the notes you made while you were in the hospital. Make sure you received the services for which you are being charged. In an age of automated billing, errors are highly likely.
  • Protest bills in writing to create a record.
  • For patients who pay cash, a growing number of online pricing tools, such as Healthcare Bluebook, Pratter, ClearHealthCosts, and FAIR Health, are available to determine and compare costs for outpatient hospital procedures in your zip code.
  • Argue against surprise out-of-network bills. You have grounds not to pay. Informed consent is a bedrock legal and medical principle.

CH 15. INSURANCE COSTS

  • Find out what percentage of your premium you are paying, and just how much is being paid in total for your healthcare.
  • You need to be crystal clear about your deductible and how it’s calculated.
  • Today, the portion of a medical bill the patient is expected to pay varies widely, and is often a percentage of the physician or pharmacy bill. The devil is in the details. Your co-payment may depend on whether care is rendered by a generalist or a specialist.
  • Pay close attention to how a plan structures its co-payments and keep in mind what medical attention you typically need.
  • You must have a very clear understanding of how your insurer defines out of pocket maximums and what will count toward them.
  • You must be vigilant about securing preapproval and sending in claims forms, even before you’ve reached your deductible.
  • Choosing a network is perhaps the most important and the hardest part of shopping for health insurance. The information provided by insurers is notoriously outdated and unreliable. Remember that all plans from the same insurance brand are not created equal.
  • Many HMOs got a deservedly bad reputation in the early 1990s, when they were far more concerned with saving money than delivering quality care. But some have survived and now provide excellent care within their closed networks.
  • The well-established HMO leader is Kaiser Permanente.

Ch 16. DRUG AND MEDICAL DEVICE COSTS

  • Learn more about the contents and cost of the medications you are taking.
  • For example, you can save a lot of money if you’re willing to take two pills instead of one.
  • Ask your pharmacist or doctor if there are more cost-effective ways to take your prescribed medications.
  • Check your insurer’s formulary to find out if different strengths of the medication are covered.
  • GoodRx.com, a Web site and mobile app, will give you the cash price of every medicine at pharmacies in your area and provides coupons for discounts.
  • If you need to take a drug but really can’t afford it, you may want to consider buying it from a source outside of the United States.
  • The healthcare industry spends $15 billion a year on advertising, about the same as auto manufacturers.
  • The FDA doesn’t require the manufacturers’ ads to compare a drug’s efficacy with that of other drugs or treatments—prescription or over-the-counter—or to list a price.
  • But much of the National MS Society’s annual income of about $100 million comes from the companies—“corporate sponsors”—that make MS drugs. In 2012 it raised only about $200,000 from events like Walk MS and Bike MS, and about $16 million in direct mail solicitations.
  • Let’s ask all medical organizations to take a pledge: Don’t allow industry to underwrite events, dinners, or conferences or pay for access to members. Most important, no one in a leadership position should take industry money.

CH 17. BILLS FOR TESTS AND ANCILLARY SERVICES

  • Protect your wallet: do not have any test or service performed by a provider outside your network.
  • As a general rule, avoid having your ordinary blood and fluid specimens sent to a hospital lab.
  • Ask the commercial lab for a printout of your results as backup just in case it is unable to transmit them electronically to your doctor.
  • Some situations demand top-dollar testing. Don’t get cheap when the interpretation of a pathology biopsy or a sophisticated sonogram or an unusual blood test will decide whether or not you need surgery.

CH 18. BETTER HEALTHCARE IN A DIGITAL AGE

  • Health technology can be deployed for enormous patient good, but often all it offers up are useless, but profitable, services.
  • Wearables. Some people like constant data. Some people find such data motivating to exercise more.
  • Technology-enhanced screening. Look at the published guidelines from these two organizations for screening and refuse everything else, unless your primary care doctor gives you a convincing reason.
  • Telehealth. But the quality of the care is hard to assess, and this is advice and treatment that your doctor or your health system should be providing for free. Telephone advice is part of what doctors have always dispensed, and they should not abdicate that responsibility now.

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