Meaningful healthcare reform requires understanding of our complex healthcare system. Our unique combination of public-private funding and free-market capitalism system has been a major source of medical care advancements over the last half-century. The entrepreneurial spirit of risk takers who have invested billions of dollars to push forward innovative ideas and products has been key to its success.
Below is some common sense on Healthcare from someone who knows: Dr. Earl W. Ferguson:
I had the opportunity to interview Dr. Ferguson in his home just outside Ridgecrest, CA and we talked about what’s wrong with the healthcare, insurance and government agencies and programs currently and historically charged with delivering healthcare to the American people.
Should I be fortunate enough to be elected to Congress this year, it’s folks such as Dr. Ferguson whom I’ll surround myself with to get real problems solved for Americans who now find themselves faced with mostly screaming matches, disinformation and ideology.
Dr. Ferguson is very serious about effecting the national dialogue on healthcare. He agreed to pen an exclusive article for us and it appears below. I hope you find it as enlightening as I did.
“Why Congress and State Legislatures Needs to Listen to the American People and Healthcare Providers Regarding Healthcare Reform”
Our healthcare system is far too bureaucratically complex and unresponsive to the needs of the American people. Our elected officials, big government bureaucracies, big healthcare businesses and special interests are driving us further into an expensive, regulation-laden healthcare system that supports their interests, not the interests of the American people and front-line healthcare workers.
Healthcare has become a gigantic business consuming 18% of our GDP and distorting our relatively free market healthcare system. Front-line healthcare workers are being forced to live by complex and conflicting laws, regulations, rules and mandates promulgated by individuals and agencies that are far removed from healthcare services. The people and healthcare providers have had no voice.
The Health Insurance Portability and Accountability Act (HIPAA), False Claims Act (FCA), Anti-Kickback Statute (AKS), Physician Self-Referral Law (Stark law), Exclusion Authorities, and Civil Monetary Penalties Law (CMPL) are a confusing mess. Providers are prohibited from collaborating in some instances and encouraged to collaborate in others (such as Accountable Care Organizations that emphasize team based approaches), and relieved from those regulations in certain circumstances, but not in others. The bureaucratic complexity and conflicting regulations promulgated by these laws are almost impossible to negotiate. Overregulation and excessive, complex and confusing documentation requirements and overzealous enforcement activities greatly increase healthcare costs. The risk of being unable to comply with every detail of these bureaucratic requirements is undermining our American healthcare system and driving many providers to leave the practice of medicine.
The Center for Medicare and Medicaid Services (CMS) Recovery Audit Contractor (RAC) Program uses private contractors hired to find any faults they can in claims paid in the past five years (recently increased from three years) to recover payments. Claims can be reviewed based on current standards, not standards at the time of claims. Auditors can recover >$1B/year and are getting more aggressive in their audits. Audits are in minute detail and hospitals and providers are being held responsible for mistakes made by independent companies that are contracted to submit claims, even if due diligence has been done and adequate compliance procedures confirmed.
The lack of CMS oversight of Medicare Zone Program Integrity Contractors (ZPICs) who perform RAC audits and the lack of knowledge and expertise of ZPIC staffs has been a major problem. Many providers have closed their practices or laid off employees because of aggressive actions taken by ZPICs based on poorly conducted investigations. In most cases, no fraudulent activity was identified and cases were never referred for legal action. However, Medicare reimbursement was withheld and huge amounts of money, time and energy required for providers to defend these actions have financially ruined many legitimate providers.
The US Department of Health and Human Services Offices of the Inspector General sets the tone of what can easily be interpreted as a war on healthcare providers in its publication, A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse that includes such “guidance” for providers as: “It is illegal to submit claims for payment to Medicare or Medicaid that you know or should know are false or fraudulent…Under the civil FCA, no specific intent to defraud is required…There also is a criminal FCA…Criminal penalties for submitting false claims include imprisonment and criminal fines. In some industries, it is acceptable to reward those who refer business to you. However, in the Federal health care programs, paying for referrals is a crime…Under the CMPL, physicians who pay or accept kickbacks also face penalties of up to $50,000 per kickback plus three times the amount of the remuneration. The Stark law is a strict liability statute, which means proof of specific intent to violate the law is not required.”
A recent case highlights the financial impact of these problems — a judgment against Tuomey Healthcare System, a 240-bed hospital in Sumter, South Carolina, for $277 million (Carlson, J, Modern Healthcare, 10-1-2013). This involved more than 21k Medicare claims worth a total of $39.3M. The court imposed $39.3M in Stark penalties and $237.5M in False Claims Fines for an institution with annual revenues of $202M.
These are penalties that a community will not recover from.
Additional risks for healthcare providers include audits, sanctions and fines for HIPAA violations, EHR meaningful use incentive audits, and IRS revenue code violations. There are also challenges for payments and reasonable compensation that require excessive documentation.
These issues and complexities will get worse. The World Health Organization has a new International Statistical Classification of Diseases and Related Health Problems 10th revision classification list (ICD-10) of 14,400 different codes for tracking problems and diagnoses. Our government expanded those codes to 144,000 (US ICD-10 CM with 68,000 Clinical Modifications and US ICD-10 PCS with an additional 76,000 Procedural Code System) not used by other countries and considered unnecessary by most healthcare providers. In addition, before the ACA, efficient primary care provider practices employ 3.5 full-time equivalent support staff for each provider, largely because of fixed, mandated administrative and billing requirements.
The result is that 58% of provider reimbursement (income) goes to pay fixed, mandated costs (Medical Group Management Association Cost Survey for Primary Care Practices 2010 Report Based on 2009 Data). Further increasing administrative requirements will make it less and less feasible for providers to maintain financially viable practices. We should expect many more providers to leave medical practice and major impacts on the availability of healthcare services.
Another example is the California Office for Statewide Health Planning and Development (OSHPD) that must approve all aspects of hospital construction in an inefficient, complex and expensive process. In 2011, our critical access hospital, that is 80 miles from a larger hospital, committed to purchasing a CT imaging system for rapid evaluation of patients with chest pain. Such a program would decrease by more than 85% the need to transfer patients to medical centers, a two-hour ambulance ride away, and would save millions of dollars a year in healthcare costs. Renovations qualified for a one-month expedited OSHPD review. However, OSHPD took more than two years for approval and the approval process cost $400,000 for renovations expected to cost less than $100,000.
We The American People should demand simplification and standardization of these and other inefficient, expensive and excessive legal, regulatory and bureaucratic administrative requirements. We must allow providers more freedom from such unrealistic constraints and give them more time to concentration on our healthcare needs.
This will only occur if our elected representatives are held accountable at the ballot box for their failure to listen and fix these travesties.
Earl W. Ferguson, MD, PhD
Dr. Ferguson is a healthcare executive, cardiologist, and preventive medicine specialist and a Fellow of the American College of Cardiology, the American College of Physicians and the American College of Preventive Medicine. Dr. Ferguson was a member of the Federal Senior Executive Service as the Director of Aerospace Medicine and Occupational Health for NASA before moving to Ridgecrest in 1996 to develop advanced rural health information technology.
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