Medicaid: Gaming the System


We hear from all quarters that health care is a complex issue and solutions are difficult to implement. One political faction argues for a “single payer” command control Health Care system. Conservatives like to point out that we haven’t had an unfettered health care market place since 1965 and the problems we have today with costs, quality, and access are the direct result of a devolution into socialized medicine.

There has been testimony before legislative committees that patients on the margins have been harmed because of their lack of access to medical services. But is the lack of access any different for Medicaid patients, or for patients with commercial insurance who have to pay 20% co-pays (capped at $7500) and deductibles forcing them to stay away from ER’s and clinics because they can’t afford these costs even though they have health care insurance. Are just as many of them suffering from lack of access as the indigent?

A medical doctor testified before one committee last year that our health care system in the USA was 35th in a ranking by the World Health Organization. In that same 2016 document, the WHO pointed out that methodologies for defining endpoints for morbidity and mortality differ greatly between countries. As an example, they pointed out that the USA counted neonatal mortality as any live child delivered irrespective of gestational age when many countries only counted full-term deliveries.

In a footnote, they opined that if the USA had used similar methodologies they would rank 3rd in the world instead of 35th. I am sure the doctor testifying before the House Health and Welfare Committee either didn’t take the time to read the footnote or purposefully didn’t disclose the information to the committee because it didn’t fit his narrative. The truth is that in almost all the Western industrial countries we have either hybrid health care systems or two-tiered systems. In Canada, over 50% of the citizens of British Columbia have Health Insurance via a private carrier. They go to the USA for high-risk ob. and neonatal care, cancer care, heart care, and complex medical imaging.

Invoking public health investment as the solution to these discrepancies is short sited. Clean water, clean air and food, and vaccinations make huge differences in public health, but the major causes of death in our country between the ages of 5 and 55 are smoking, traumatic accidents cancer, and obesity and diabetes. These, for the most part, aren’t public health issues, but issues of individual responsibility. In the USA the medical causes of morbidity and mortality and the impact of modern medical care strategies for diseases like cancer, infectious diseases, prematurity and it’s complications to babies, heart disease, and the care of the injured patient—both in civilian and military, have no other country that can come close to our success.

In Great Briton and Scotland over 50% of the population has private health insurance. Private medicine thrives in these countries as do private hospitals clinics, and ambulatory centers, but many patients travel across the pond for their medical care. Net import/export for medical services runs above 90% and if one were to count overseas missions on the plus side of that balance—we are actually exporting free services that number is well over 98%. If our health care system is, in fact, inferior why do sick people come to our country for care and invite us to their countries?

In our country today 55% of health care is either given directly, subsidized directly or incentivized via tax credits from the government. Medicare, Medicaid, Tri-Care, VA and the Indian Health Service Fall into this category. Let me use a simple example of how a well-meaning government program can hurt the people that need the most help. We all agree that those living on the margins, who through no fault of their own cannot take care of themselves, many times because of their chronic conditions, need to be assisted and helped. But I would like to point how subsidies and incentives can actually hurt the access that the traditional Medicaid population has to providers and how providers have adjusted their business models to increase profits on the backs of taxpayers.

I am familiar with the conditions in Idaho’s rural communities because for 20 years I saw a weekly clinic and operated in Emmett Idaho. I will use small round numbers to make my point. Then I will repeat the argument with real numbers provided by Medscape an online Medical Education and Coalescing service that most doctors access every day. Say the average family practitioner sees ten patients a day and gets $10/patient. At the end of the day, he would bring in $100 of revenue. Average overhead for employees, rent or mortgage for the office and malpractice coverage is $60/day. The doctor then takes home $40/day. Now say that same doctor takes on 3 Medicaid patients that pay him $5/visit instead of $10. He will then have $85 of revenue-a 15% decrease with $25 left over to pay himself.

Should that doctor take on 2 more Medicaid patient—leaving him with 5 commercial and 5 Medicaid patients he would receive $75 of revenue and take home $15? With each new Medicaid patient, the doctor sees less marginal income. If he saw 10 Medicaid patients only he would lose $10. So what does he/she do? They can see more Medicaid patients—less time for each patient. What happens in this situation is the patient pool is culled—the doctor will see only those Medicaid patients with few or simple problems. Those complicated patients will be shifted to other providers—many times in towns or locals distant from where their homes and families are. Or the doctor can put a cap on his Medicaid patient percentage—also limiting access.

The final solutions for the doctor to join a large provider network—an Accountable Care Organization (ASO). By having many doctors join a few organizations it actually limits economic supply and increases prices. But also the providers themselves take advantage of the new laws and in many instances “double bill” for services. That same office visit described above for the private doctor that was billed out at $10/ visit—professional fee only, is now billed out at $20—professional and “facility fee”. The private doctor again can only charge the professional fee. In addition, the large provider conglomerates can get direct payments from government agencies in the form of DSH —disproportionate use payments—though one of the good things about the ACA was that these are being phased out, but also activation fees for certain specialty designated facilities. And who pays for these additional charges—taxpayers.

So the average physician seeing 30 patients a day bringing home $225,000/year needs to make $600,000/year to pay for overhead and expenses. When between 35-45% of his services are being discounted by Medicaid or indigent patients he will either stop seeing patients—what many doctors have done when they retire early, or he will change the acuity of patients she is taking care of. Access then becomes limited.

Most of the Medicaid Gap population we are told are healthy. We also know that the average patient on traditional Medicaid is sicker than the average patient. The simple way for providers to make ends meet is to see more of the gap patients and fewer of the sicker patients. In reality, the government program is forcing providers to discriminate against sick patients.

We are blessed in Idaho to have an outstanding Medical Community of doctors, nurses, tech, PA’s, and FNP’s. But ask almost anyone, also ask paramedics and EMT’s that work on squads and Life Flight—other than a hospital administrator or upper management, and they will confirm what is happening in medicine today. Sick patients themselves are being discriminated against because they cut into the margins of the large non-profits.

I went into Medicine to take care of sick patients, not subsidize large hospital systems and insurance carriers who, it must be said, adjusted to the new rules of the medical reimbursement game on the backs of patients (medical bills) and citizens (taxes for subsidies and incentives). 80% of patients have insurance and have seen their health care premiums go up over 200% over the past 8 years—not to mention co-pays and deductibles, they are also seeing their taxes go up. So now you see how the payment system plays out at the bottom end. Shouldn’t the doctor-patient transaction be put at the top?