Nice Work If You Can Get It

Philosopher Eric Hoffer once wrote: "Every cause begins as a movement, becomes a business, and eventually degenerates into a racket."

Lately, health care seems less about causes and more about rackets.

A couple weeks ago the Feds charged 243 people with Medicare fraud, alleging some $700 million in false billings.  Big win, but just the tip of the iceberg of suspected fraud, which some experts believe could account for as much as $70b in Medicare and Medicaid payments.  Yikes.

For example, People profiled the case of Michigan oncologist Farid Fata, who recently plead guilty to multiple counts of fraud.  His indictment charged that: "At times, Fata bullied, berated and browbeat patients who dared to question his treatment, telling them they risked death without him or in the case of a patient who could not afford copays, 'It's your life or your money,'"

Talk about a racket.

Health care is a big business, generating over $3 trillion in annual revenue, so some level of criminal activity is to be expected.  What I worry about most are not the criminals who are purposely cheating, but, rather, the people who seem to feel they are entitled to siphon off as much as they can from the health care spigot.

CMS released their second iteration of Part B claims last month (to the continued consternation of the AMA).  I wrote about the initial release last year, with its eyebrow-raising finding that hundreds of physicians were getting millions of dollars annually from Medicare.  Now Bloomberg reports that the latest release -- still for 2013 -- shows 3900 such "Medicare millionaires."

As the headline says, nice work if you can get it.

I'm not suggesting that all or even most of these physicians are doing anything improper (although Bloomberg notes that two of the three highest paid doctors in the initial release are already facing legal troubles), and certainly the data are not perfect, but -- really?  3900 making at least a million a year from Medicare alone?

I doubt that many of these Medicare millionaires are making their living from office visits.  More likely they have simply figured out how to game the system for all they can get, not always with a corresponding positive impact on their patients' health.

For example, The New York Times recently reported on the boon in diet clinics, caused by requirement in ACA that health insurance pay for obesity and nutrition screening.  They quote Marketdata Enterprises as estimating that medical weight-loss clinics are a $1b industry, and will grow 5% a year through 2019.  All this for programs that "often employ techniques that are unproven and even some that have been discredited."  Many of these clinics also sell supplements that not only aren't covered by insurance but that also "are backed by little, if any, scientific evidence for promoting weight loss."

Similarly, The Times reported on the boom in the concussion industry, caused by interest from such diverse concerns as the Defense Department and the NFL.  Research money is flowing in, and many new forms of diagnosis and treatment are being tested.  Unfortunately, as The Times said, "medical experts are raising concerns that it is a business where much of the science is sketchy, belief frequently outruns fact, and claims of technological breakthroughs evaporate soon after they are made."

"It is a Wild West out there," Michael Singer, CEO of Brainscope, told The Times.  Brainscope's concussion device is FDA approved, something that is not universally true in the field.

I'm not even sure that FDA involvement makes things much less of a Wild West, as they seem quite happy to approve treatments that are no better clinically yet end up being much more expensive than existing alternatives (witness stents or spinal fusions).

Undue influence is another way to game the system.  The latest Open Payments release showed that drug and medical device makers paid some $6.5b to doctors and teaching hospitals in 2014, for research, consulting, speeches, royalties, and other activities.  They can afford the payments; the profit margin for pharmaceutical companies is estimated to average close to 20%.

Payments went to some 600,000 doctors and 1,100 hospitals.  That's out of 900,000 active physicians and pretty much every teaching hospital, so odds are pretty good your doctor got a payment.  A Promedica analysis found several physicians who received payments from a drug company nearly every working day; 768 received payments more than half of the days in 2014, and 14.600 got such payments on at least 100 days.

Bloomberg charged that the payments are intended to "convince doctors that 2nd choice is OK."  As Dr. Jerry Avorn, a Harvard medical school professor, told them:

"It’s striking that the top two drugs are expensive new products for diabetes that are by no means first-line choices.  No one is spending this kind of money to educate doctors about metformin, the inexpensive generic drug that’s the most important foundational treatment we have for this disease."

The AMA, of course, is still defending the payments and protesting the accuracy of the underlying data, and the pharmaceutical companies argue that newer drugs require more "education."  I'm sure that some, even many, of these payments are legitimate.  Certainly I have no beef with inventors getting paid for their patents.  But the trick is to make sure that patients' best interests remain foremost, not the providers' bottom line, and the burden of proof is on them.

Twenty years ago consumer-directed health plans were a cause.  Now they've clearly become a business, capturing around a quarter of the employer marketplace and accruing some $22b in HSA/HRA assets.  Not too shabby.  Whether they have moved to the racket stage depends, in part, on your political views...and your income level.

mHealth is a more recent cause, with wild forecasts -- 33% CAGR over the next five years, $100b in "savings" over the next four years.  I'm wondering from whose pockets that $100b is supposed to be coming, and into whose it would end up.

Honestly, some days I think that our existing health care system, with its ingrained medical-industrial complex that protects its own, is beyond salvaging.  Too many people are making too much money and have too much of a vested interest in the status quo.  As I wrote last year in Getting Our Piece of the Pie, I worry that new entrants may be less interested in up-ending the status quo and more interested in simply getting their share of the money.

There's plenty of innovation -- new medical devices and techniques, new drugs, ACOs, value-based payments, PCMHs, reference pricing, telehealth, wearables, to name a few -- but most seem to involve the usual suspects, operating under the existing financing, delivery, and regulatory structures.  That's no way to start a movement and no way to assure they won't all end up like what we've got.

If we don't want health care to degenerate into a racket, we need innovations that come out of left field, with disruptors who want no part of the status quo.  As Apple used to say, Think Different!