3M’s Medicare Boondoggle
By Justin Gardner | Related entries in Health Care, MoneyWASHINGTON, July 16 � The Bush administration says it plans sweeping changes in Medicare payments to hospitals that could cut payments by 20 percent to 30 percent for many complex treatments and new technologies.[...]
Medicare pays more than $125 billion a year to nearly 5,000 hospitals. The new plan is not expected to save money, but will shift around billions of dollars, creating clear winners and losers. The effects will ripple through the health care system because many private insurers and state Medicaid programs follow Medicare’s example.
Okay, so there’s a good reason for this, right? We did thorough research and are making the necessary adjustments because of it, yes? Well, sort of…but here’s where it gets really strange/interesting/sad.
Because yet again, we find a variety of the “no-bid” contract we’ve become accustomed to from this administration. However, this time we paid a company (3M) to look at our current Medicare system and see if their own billing technology could help make the system run smoother.
Yes, you read that right. We paid a company to investigate their own software’s usefulness for the billions of Medicare payments that are processed each year. Anybody want to guess what they found?
This is laughable. Check out this logic from 3M:
Richard F. Averill, research director of 3M Health Information Systems, said the sole-source contract was justified and denied that his company had a conflict of interest. As an inventor of the 1983 payment system, Mr. Averill said, he and his colleagues at 3M know more about it than their competitors.Moreover, Mr. Averill said in an interview: “The contract required us to use the 3M system in our analysis. There was no evaluation of alternatives.�
My friends, these are truly “amazing” times.
Oh yes, and one last thing…this move has the potential to drive up healthcare costs.
When hospitals lose Medicare revenue, they often seek higher reimbursement from private insurers. J. Brian Munroe, vice president of WellPoint, one of the largest private plans, said he feared that the Medicare changes “will introduce a significant amount of disruption to the commercial health insurance marketplace, driving up health care costs and causing marketplace confusion.�
Good times.
This entry was posted on Monday, July 17th, 2006 and is filed under Health Care, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
July 17th, 2006 at 12:36 pm
I can’t speak to the details but a sweeping revamp was a foregone conclusion once Medicare Part D was passed and rightly so. Medicare paid a lot for certain things and very little for others. Readjusting things to better align pricing so we no longer have perverse incentives to go to surgery when medical management is available and a better solution to boot is a *very* good thing both for the health of US medicare recipients and the health of the fisc.
As for 3M, from what I understand, they were asked whether the current system that the government already owns as of 1983 could handle the new payment realities being rolled out. 3M says yes, that the government doesn’t have to spend more money on new software.
If the payments system breaks down, I will be personally affected as my wife gets paid via this system so it’s my family’s skin on the line here. In short, I deeply care if 3M is lying. I’m underwhelmed at the idea of the cost of replacing the 1983 system with a more modern one if we don’t have to but if 3M was self-dealing they should be excluded from bidding on the replacement system. That’s incentive enough to ensure an honest evaluation.
It’s arrant nonsense that this move is going to drive up healthcare costs beyond some paperwork to input new numbers and recalculate each institution’s business plan based on the results but healthcare institutions are doing that every year anyway. What may happen, what should happen, is that poor healthcare treatment choices will be less likely to be taken care of invisibly by the feds and more likely to show up as $$$ consequences that will incentivize the industry to rationalize how they do medicine.
There’s an appalling amount of fat out there combined with some areas that are truly underfunded and needing more compensation to attract supply. The adjustment process will be accompanied by a *lot* of protest and squealing, much of it completely dishonest and self-interested. One should resist the temptation to believe it all uncritically.
July 17th, 2006 at 4:53 pm
[...] Would you pay a company to evaluate their own software to see if it would be useful to you? Justin points out 3M was paid to look at our Medicare system and see if their billing technology would make the billing process smoother but could potentially raise healthcare costs. Possibly raise them for the people who have a hard time paying it as it is. [...]