HEALTH CARE:
Medicare Is Bad for Your Health

By Philip R. Alper

Hoover fellow Philip R. Alper explains how Medicare's convoluted regulations put the nation's health care system at risk.

Last summer Columbia/HCA teetered on the brink of disaster after the Health Care Financing Administration (HCFA), which administers Medicare, accused the company of massive fraud. On the other side of that continuing fight, HCFA head Bruce Vladek recently resigned, saying he was exhausted by trying to control fraud in the $300 billion Medicare and Medicaid programs.

This battle is really over differing answers to the question "How many CPAs can dance on the head of a syringe?" What's lost in all the bureaucratic and legal mumbo jumbo is a fact that's far more damaging to our nation's health care system: It's too difficult for doctors to do their jobs well while at the same time coping with a proliferating web of fraud-fighting regulations.

Bewildering Regulations

The predicament is a lonely one. My patients don't know that new laws subject physicians to criminal fraud prosecution whenever they disagree with Medicare about when to order a lab test or how to characterize a diagnosis. As an internist specializing in geriatrics, I can't ignore the increasing risk to my own well-being and my family's simply from remaining in practice. But Washington doesn't care that doctors like me do our best to play by the rules and have never had any regulatory problems.

This is surely hard to believe. So here's a test question: If a doctor orders a stool specimen to test for occult blood--which might indicate early colon cancer--is he engaging in good medical practice or criminal behavior?

Answer: It all depends. If the patient doesn't have symptoms and the bill is sent to Medicare, it's a criminal offense because these "preventive services" aren't covered benefits. Thus, billing them to Medicare is considered fraud. The absence of intent to cheat Medicare doesn't matter. Fines of up to $10,000 per "incident" of such "fraud" may be levied on the physician who simply orders the test from a lab at no personal profit.

In this Alice-in-Wonderland system, patients and doctors are both in trouble. Nobody knows what to do and everyone is afraid to ask.

In contrast, tests are legal when they are used to confirm a suspected diagnosis. But many cases are borderline. And there's a difference between the screening tests that Medicare covers and what's recommended by medical authorities. Sometimes the authorities don't even agree among themselves. For instance, the American Association of Clinical Endocrinologists strongly recommends thyroid screening for elderly patients, but the American College of Physicians doesn't endorse it. That's why the personal physician treating George Bush--who's had access to first-rate health care his entire life--failed to check his thyroid and why Mr. Bush's heart complications were the first clue that something was awry.

I've tried explaining Medicare's rules to patients. Most are bewildered. One patient left me when I asked that she pay for some screening tests herself. Since mammograms, Pap smears, and flu shots are covered and since her friends hadn't been asked to pay for any tests, she figured I must have been up to something funny.

Other doctors concur that ordering a lab test for Medicare patients can be as complicated as obtaining an informed consent for surgery. That's just crazy. In this Alice-in-Wonderland system, patients and doctors are both in trouble. Nobody knows what to do and everyone is afraid to ask.

One regulatory time bomb is now ticking loudly: The HCFA advises labs that don't get a "correct" diagnosis code from the ordering physician to bill either the patient or the doctor for the test--or just do it free. Instead of a bill, patients receive three-page, single-spaced letters advising them of Medicare's action in terms that would take a team of lawyers to decipher. That leaves doctors, patients, and hospitals to fight it out among themselves. And if anything goes wrong, patients may be liable for bills for lab tests and some diagnostic procedures at up to ten times what Medicare will pay.

Given its concern over rising costs, it's extremely odd that Medicare has never attempted to educate doctors on how to order lab tests in cost-effective ways. Instead, in its accelerated anti-fraud mode, HCFA is now instructing labs to "voluntarily" set up their own programs to spy on physicians and to report "suspicious" test-ordering patterns. Labs that cooperate with this spying are told they can expect the HCFA to go easier on them when it is their turn to be audited. A Russian friend told me this reminds him of the Soviet Union.

Poisoned Relationships

Even in the best of worlds, medical care is a complex business. But the HCFA is poisoning doctor-patient relationships. When an elderly patient of mine demanded unnecessary home health visits because her neighbor got them, I followed the rules and refused. The patient soon found someone else who was less concerned with the rules--and with the criminal penalties for breaking them. Since I became a doctor in order to care for patients, such cases are hard to forget.

Controlling Medicare fraud requires cooperation between doctors and the HCFA. Over the years, I've kept many patients out of the hospital, avoided unnecessary operations, and reassured people who incorrectly thought they needed expensive tests. I don't expect a commendation for saving a bundle of money for Medicare because that's part of my job. But I must say that when I see problems and solutions that Medicare ought to know more about than it apparently does, I feel more like a character in a Kafka novel than a partner in the program.