Medicare needs to be more like a credit card

I live in New York. Last week my daughter in Chicago called to say that a five dollar charge had been refused at a local coffee shop. My credit card company had identified an unusual pattern of purchases, and had put a hold on the card.

No similar process exists for the Medicare system, where cost savings could be realized by systems that identify unusual patterns of charges and outright abuse by providers of medical services and equipment. A single basic change in the way the system operates has the potential to both save money and improve the care of patients.

When a Medicare patient has a service provided, the service is billed after it is done. A physician, for example, may bill a charge to Medicare one hour, one month, or one year after it is performed. There is no approval at the time of the charge, as there is with the credit card. Take the example of a 70 year old woman who sees her primary physician in New York for a regular visit. As part of his/her preventive practice, an ultrasound of the carotid arteries may be performed to assess her risk for stroke (no comment on whether this represents appropriate practice). The result is normal. Several months later, spending the winter in Florida, she sees a physician for monitoring of her blood pressure. Another Doppler study is performed. Who will get paid for performing the Doppler study, the first or second physician, or both? Well, it may depend on who bills the charge first, and several other factors.

A credit card for Medicare

If the Medicare card were like a credit card, the service would need to be approved before the charge was billed. And sophisticated software, such as the fraud detection systems used by credit card processors, could be utilized to identify duplication of services and potential patterns of fraud.  Both ethical and political opposition to such a change would be significant.

Changing the system to have Medicare charges approved before the service means sometimes saying ‘NO’ to a patient that is already at their doctor. Any hint of curtailing Medicare benefits has led to violent reactions (‘death panels’) by the opponents of such change. And the public may be justifiably fearful of choices made by committees or bureaucrats who have no knowledge of Medicine. Is there any way to make this work?

Doctors need to step forward

Physicians know their business. Professionals in every medical field and specialty are aware of what their colleagues are doing, and where savings can be achieved without harm to patients. Patterns of abuse by sellers of durable medical equipment (wheelchairs) are recognized. But there has never been any reasonable incentive for physicians to lower costs. Doctors, after all, are paid for the services they perform.  And the legal environment makes it dangerous at times to withhold services.

Medical societies in each specialty should create groups to analyze practice patterns, and suggest ways to identify potential savings. A percentage of the cost savings must then be returned to establish and increase reimbursement to physicians for direct contact with patients. This would include an increase in payment for office and hospital visits, and payment for telephone communications and emails. This would be a win-win for patients, physicians, and the society.

A credit card company such as MasterCard or American Express could easily handle the processing of Medicare charges. Card reading devices are standardized and ubiquitous, and they have experience with sophisticated fraud detection systems.

It is time for creative ideas that originate from the providers of healthcare, and not from government or insurers. The real partners in the healthcare system are patients and providers. They need to work together to improve systems of care.

Steven Rudolph is a neurologist who blogs at Thoughts on Technology and Medicine.

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  • Michael F. Mirochna, MD

    does repetition of tests not happen when there is an EMR that can be seen nationwide?

    I like the credit card idea… brilliant except that they really should use a credit card. Cash pay.

    If people had to pay for their own tests… wow, then we’d really have to think about how we practiced medicine.

    • Vox Rusticus

      Where is this thing you call “EMR seen nationwide?”

  • Steven Reznick MD FACP

    Great idea Dr Rudolph. It drives me crazy here in South Florida when I read that Medicare has paid millions for durable medical equipment and home health services to a storefront run by organized crime that doesnt exist. Your credit card idea makes sense and is one I have pushed for unsuccessfully for years.
    Are you the S Rudolph from Brooklyn College organic chemistry days?

  • crocoduck

    sorry, never going to happen. and you touched upon the reason:

    “the legal environment makes it dangerous at times to withhold services”

    even a near-perfect system would eventually encounter a situation in which a procedure is unnecessarily or inadvertently denied due to a bug in the system and a patient suffers or even dies as a result. what incentive does the payer have to assume this risk, when the payer can let the provider assume the risk and just review charges in hindsight.

  • SarahW

    As I’ve mentioned before, that liability is the only safety net that protects patients from improper withholding of services.

    Medicare was a boon to medicine in the beginning, but it was the beginning of the end, the beginning of a distorted market, helping to fuel medical inflation overall. It also began the course that has led to the (comparative) end of the personal relationship between patient and doctor, and his discernment and judgment supplanted by organizational priorities.

    End medicare. End it. Grandfather in a last generation and return to a system where the prudent save for basics and insure for catastrophe or extraodinary expenses, and enact laws prohibiting higher fees for the uninsured. Get rid of the great government distributed tub of money that health care has centered around and grown around for the last ~45 years.

  • IVF-MD

    Your idea of checks and balances and accountability and due diligence in determining what is paid for by MediCal and is totally great. And that’s what would evolve if the people doing the determination had an incentive to both procure the best care for the patient while saving the most money. But that scenario only happens when the entity that guards the patients interests is also the entity that guards the money pool. This only occurs in a free market. In a free market, when the patient pays out of pocket, they will also be smart about the best way to allocate their limited resources. They will also intrinsically have a primary motivation to look out for their best interests.

    Contrast this to an insurance-based paradigm. Unless insurance companies fear competition of premium money going to other entities (and this will never happen as long as govt regulations continue to offer protection of the existing big insurance companies from healthy competition), the the insurance companies primary motivation is cost-savings and not the well-being for the patient. This leads to tipping of the scale towards more denial of services whether blatant or surreptitiously though bulky paperwork that tends to stall things and delay utilization. Or you could have the government model where the bureaucrats administering the process have a “it’s-not-my-money” attitude and they just want to keep the recipients of care from complaining, so they are very lax about approving things and would not implement the aforementioned checking system that credit card companies do.

    Again, all the more reason to remind ourselves that while not perfect, a free market approach offers overall better solutions than a central planning one.

  • rwatkins

    Sounds like what you’re advocating is real-time pre-authorization of everything the doc orders. Can you imagine seeing a complicated Medicare patient and sitting there trying to get 10 or 15 tests approved? Or else sending them to checkout, and having no idea which of the tests you ordered will get done in a timely manner? Could be a nightmare.

  • paul

    i’m fine with your credit card idea, provided that when services that are deemed unnecessary are withheld and results in a bad outcome, the payor who decided it was unnecessary is held liable. now let’s sit back and watch nothing change.

  • gzuckier

    In a previous life, I worked for an insurer which required “preauthorization” within 24 hours following an ER admit, yet would not staff the preauthorization phones outside normal working hours; posting the specter of a patient with arterial disease showing up at the ER with chest pains the night before Thanksgiving and getting admitted, being discharged the next Monday not having had an MI, and seeing a whopping bill despite the admit being the correct decision and the lack of preauthorization being the fault of the insurer. The insurer’s solution: never actually enforcing the 24 hour rule.

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