Following the Money


This week’s health policy news roundup curated by Jane Orient, M.D.

Personnel is policy, and following the personnel is a good clue to where the money is going. Marilyn Tavenner, who spearheaded the Affordable Care Act rollout for the Obama administration, is the latest ACA insider to cash in. “Lobbying for America’s Health Insurance Plans is a natural transition for the former director of the Centers for Medicare and Medicaid Services (CMS),” writes Brendan Williams. Before running CMS, she was a colorless apparatchik for Hospital Corporation of America (HCA), a company that once paid $1.7 billion in penalties for fraud.

The revolving door has long existed, “but the commingling of industry and government interests under the ACA brings with it new implications,” Williams writes. “Simply put, the ACA represents the biggest transfer of taxpayer resources to the private sector since Gilded Age railroad barons were beneficiaries.” Williams supplies many other examples.

As the health insurance industry morphs from a dynamic, competitive industry into a public utility, Tavenner is the perfect pick, writes Merrill Matthews. Instead of competing for customers by innovating new products and keeping prices low and quality high, public utilities compete for government favors.

The way to get more money under new payment methods that adjust for patient risk is to fiddle with the algorithms that calculate risk. Medicare Advantage plans have allegedly defrauded Medicare of $70 billion in this way—and it took CMS 5 years to figure it out. Andy Slavitt, who did risk modeling at Ingenix, is now in charge at CMS. The AMA class action suit proved that Ingenix was using risk fiddling factors that short paid doctors and patients on out-of-network charges for 15 years. “So my opinion,” writes Barbara Duck, “now we have the expert at the helm of such models and a rerun of risk fiddler factors is in the works.”

So what will Medicare do to staunch the hemorrhage? Bundling payments for hip and knee replacements will make it risky for hospitals to perform these procedures—which increase life expectancy. “Seniors with severe arthritis who opt for a knee replacement are 50 percent more likely to still be alive seven years later than seniors who don’t. Pain and immobility are killers,” writes Betsy McCaughey. But President Obama thinks too many seniors get the procedures.

Instead, Medicare will pay doctors for “end-of-life” counseling, encouraging seniors to decline care.

How about economizing on ObamaCare? “The federal government and the states have no idea what happened to billions of dollars given to create Obamacare’s exchanges, according to a federal watchdog,” writes Robert King.

California is voting on whether to open Covered California to 2.5 million illegal aliens on an unsubsidized but guaranteed-issue basis. Illegals are not subject to the individual mandate. Actually, this possibility already exists, but the California law would expand and promote it. Consider this, writes Robert Laszewski: “SB 4 would also make it clear that a foreign person could land at LAX, give Covered California a call and sign up for an almost full pay Platinum plan for a few hundred dollars a month, on the first of the following month when their coverage became effective show up at Cedars-Sinai Medical Center and have thousands of dollars of treatment, get back on the plane and go home, and then drop the coverage.

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