I’m sure you’ve already heard. In response to the ‘debt deal’ passed in August a ‘super committee’ has been formed whose mission is to cut costs and thus reduce the deficit. In the cross hairs are Medicare and Medicaid. No doubt about it, the nation’s debt is sky high, and cuts need to be made. What I do doubt is the wisdom of the cuts without addressing the problem. The problem being – there are no controls at the point of purchase.
Reducing Healthcare Costs
Currently 49 million people are on Medicare, which accounts for 15% of the federal budget (no doubt, why it’s on the hit list). Take that number and add the aging baby boomers and the anticipated additional 20 million to Medicaid in 2019 and you have significant additional expenditure, which can only mean more cuts in the future to reduce costs. See a pattern? To reduce costs, reduce services and payments. How long can we keep this up without affecting care? Thus, I return to my point — fix the problem.
Obstacles to Cutting Healthcare Costs
The problem is the decision makers aren’t getting access to the critical data necessary to make informed, business decisions. For instance:
1. A patient receives a service, but doesn’t know what is actually billed to Medicare. The bill received is not itemized. This leaves an open window for fraud, waste and abuse.
2. An employer is paying for its employee’s healthcare, but doesn’t know what services his employee received, only what is billed, but, not what is really paid out. There is no connection between the provider, the patient and the employer. This leaves an open window for fraud, waste and abuse.
3. A provider (a hospital, let’s say) enters into an agreement with a payer (an insurance company). There is no exchange of information between the employer and the hospital. The hospital has no idea what the employer has agreed to pay only what they are being reimbursed. This leaves an open window for fraud, waste and abuse.
4. A payer enters into an agreement with a provider to send their patients for a set of services. There is no exchange of information between the payer and the patient. The payer doesn’t have confirmation that the services were actually provided. This leaves an open window for fraud, waste and abuse.
Who’s holding all the cards? It varies, the cards can be held by any of the above parties. The problem is when you don’t know who has the cards, how can you possibly ‘cut’ the cards effectively. That’s an issue. You can cut costs all day long, but what we really need to know is where the money is going. When we unequivocally know where the money is going, then we can work on addressing the rising cost of healthcare.
To stem the fraud, waste and abuse in Medicare (which accounts for approximately $60 billion a year) we must have transparency. The way the system is now, it’s a ‘shell’ game with multiple parties benefitting financially from a fragmented environment. All parties need to have access to unfiltered information. It is only when we are provided with the unfiltered information can we make intelligent decisions and put controls in at the point of purchase. Guys, my advice, you have to know the problems before you can make the cuts. But then again, I’m only a committee of one.
Thanks for reading!