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The Problem with ObamaCare

The Problem with ObamaCare

8 Mins
July 26, 2009

With health care reform efforts well underway, President Obama is endeavoring to make good on his campaign pledge to “accelerate efforts to develop and disseminate best practices, and align reimbursement with provision of high quality health care.”

Senator Max Baucus (D-Mont.), chair of the Senate Finance Committee (which is one of the Congressional action arenas for health care reform), has released a 90-plus-page “white paper” detailing his vision of health care reform.  It states, “Congress and CMS [the Centers for Medicare and Medicaid Services] have enacted and implemented policies to increase the focus on quality in the Medicare payment systems, particularly in the areas of inpatient hospital care and physician services.  The Baucus plan will build on these efforts.”

Both Obama and Baucus have reassured voters that they won’t feel the heavy hand of government in their medical treatment.  Obama states that his “plan will not tell you which doctors to see or what treatments to get….  No government bureaucrat will second guess decisions about your care.”  Baucus’s white paper states, “the health outcomes of patients should not be compromised by efforts to reduce costs in treating specific illnesses.”

Both of these pronouncements are misleading.  While government efforts to improve quality of care might not tell patients which treatments to get, they will surely tell physicians which treatments they may provide.  And early government efforts at improving quality and reducing costs have shown potential to harm patients.


Consider “Pay-For-Performance.”  The latest fad among health care policy wonks, it even has a hip acronym: P4P.  P4P pays physicians for providing treatment that medical research demonstrates to be most effective.  In theory, it will improve outcomes for patients, and will save money by discouraging unnecessary medical care and reducing long-term costs associated with improper treatments.

Yet treatment that research shows to be effective for most patients is not necessarily good for all patients.

Dr. Sandeep Jauhar, a cardiologist, recently wrote in The New York Times about his experience with P4P.  One Medicare P4P demonstration project he was involved in paid doctors and hospitals bonuses if a patient diagnosed as having pneumonia received antibiotics within six hours of admission. This has led, according to Dr. Juahar, to “a problem all too common in hospitals today: patients receiving antibiotics without solid evidence of an infection.”

“It can be difficult to determine if the patient has pneumonia within six hours if you are in an emergency room,” he said in an interview.  “It is hard in a busy ER to get the patient’s history, do blood work and an X-ray, all of which may be necessary for diagnosis of pneumonia.”

Mixed evidence has not stopped the zeal of reformers

Thus, it is easier to just give patients the antibiotics.  That can have serious side effects, as Dr. Jauhar notes in his Times article.  A congestive heart failure patient had been given an antibiotic, but when Dr. Jauhar examined him, it was evident that he did not have pneumonia.  Dr. Jauhar writes:

I ordered the antibiotic stopped—but not in time to prevent the patient from developing a severe diarrheal infection called C. difficile colitis, often caused by antibiotics.  He became dehydrated.  His temperature spiked to alarming levels.  His white blood cell count almost tripled.  In the end, with different antibiotics, the infection was brought under control, but not before the patient had spent almost two weeks in the hospital.

To date, research on the effectiveness of P4P has yielded mixed results.  A study by the consulting firm Premier, Inc. found that mortality in hospitals decreased under a P4P initiative.  Studies of P4P in Massachusetts and in managed care organizations, however, found no quality improvements.  Finally, a report on a recent Medicare P4P demonstration project found that complications “have made for an uncertain future with respect to any payments [to physicians] under the demonstration.”

But mixed evidence has not stopped the zeal of reformers.  Baucus states that his “plan will build on [previous] efforts by establishing a pay-for-performance program for hospitals in Medicare and further strengthening physician programs that are focused on quality improvement.”


One new CMS effort that Baucus wants to build on is called “the per capita method.”  It identifies “outlier” physicians who bill too many services compared to other physicians.  The outlier physician is then informed of his deviation and educated on how to practice more efficiently.

Dr. Joseph Marshall has experienced this initiative first-hand.

Dr. Marshall is a gynecologist who has practiced in the Washington, D.C. area for nearly 40 years.  As we relax in the swivel chairs in his office he tells me, “There is a large psychological component to my practice.  The physical exam is easy.  A lot of my time here is talking to patients.”

He routinely books an hour for a visit with a new patient.

“It’s impossible to see a patient effectively in ten minutes,”
-Dr. Joe Marshall

“A lot of my new patients don’t open up easily, so I have to watch body language.  That’s one reason we have swivel chairs—the way patients move in them can tell you a lot.”

He is known as Dr. Marshall to most of his patients, although a few of his patients who have been with him for over 30 years call him “Joe.”  To TrailBlazer Health Enterprises, the private company which administered Medicare claims in Washington, D.C., Dr. Marshall is known as “Provider D17972.”  In March 2008, TrailBlazer sent a letter to Provider D17972 informing him that he had “billed a specific service in a different pattern from [his] peers.”

Specifically, from January to June 2007, Dr. Marshall billed nearly 100 percent of his new Medicare patients for roughly 45-minute visits.  According to TrailBlazer, his peers in gynecology only bill about 40 percent of their new Medicare patients for 45-minute visits.

The letter stated its purpose was “to provide education only.”  TrailBlazer recognized that “some providers who receive letters from Medicare… become unduly concerned that they have been targeted for ongoing audits or other corrective action.”


How would TrailBlazer know that?  In a response to questions I sent TrailBlazer, I was informed that “thousands of education letters, such as the one sent to Dr. Marshall, are mailed by TrailBlazer each year.”

It is amusing to note that Dr. Marshall had only twelve new patients during the time period in question.  What is not amusing is the effect this CMS initiative will have on quality.  In sensitive areas of medicine such as gynecology, patients may be less willing to divulge the information necessary for proper treatment.  Extra time is needed to make the patient feel comfortable, win her trust, and get her to talk freely. This is why psychiatrists, incidentally, don’t schedule ten-minute visits.  If physicians are encouraged to spend less time with patients, then patients’ health will likely suffer.

I asked TrailBlazer about this and the company responded, “TrailBlazer does not encourage physicians to limit their time with patients, rather these educational reports enable a provider to compare practice patterns to those of his/her peers.”

But if a letter compares a physician to his peers, and his peers spend less time with their patients, what purpose does the letter have other than to encourage the physician to do likewise?

“It’s impossible to see a patient effectively in ten minutes,” Dr. Marshall said.  “You can do a decent job with a new patient in a half hour.  But to get into depth with a new patient requires more than a half hour.”

Yet nearly half of the visits that gynecologists bill Medicare for are a half hour or less, according to data in the TrailBlazer letter.

Dr. Marshall sent a letter of his own to TrailBlazer asking for an explanation about what he had done wrong.  At the time of my interview with him, he had not received a response.  (He subsequently received one after I had informed TrailBlazer about it.)

When asked about this, TrailBlazer explained that it was in the process of closing down its D.C. operations when Dr. Marshall sent his letter.  Dr. Marshall had sent it to an office that had already been closed.

This glitch can be traced back to the law that created the Medicare prescription drug program in 2003.  That law required CMS to reform its claims process by requiring the private companies that administer Medicare claims to competitively bid for Medicare’s business.  As a result, many companies that once processed Medicare claims in a particular area lost out to new companies.  There is nothing wrong with competitive bidding per se, but in this case CMS did little to ensure that the transition from the old claims processors to the new ones occurred smoothly.  Not surprisingly, the transition was not smooth.


All Dr. Marshall suffered was a non-response to his letter.  Other physicians were not so lucky.

In California, the change of Medicare claims processors has resulted in thousands of doctors failing to receive millions of dollars in payments.  To compensate, many physicians have had to take out loans, lay off staff, or default on rent.  Physicians in Nevada and Hawaii have experienced similar problems.

A recent media report detailed the travails of Hematology Oncology Associates (HOA), a large cancer treatment center in New York State.  Because of late Medicare payments, HOA had to take out a $3 million loan to keep its doors open.  According to the CEO of Hematology, the problem began in September when a new claims processor took over in New York State: National Government Services.

Given the experiences of physicians like Dr. Marshall, it is little wonder that physicians recently ranked “reimbursement” and “government regulations” as the first and third most unsatisfying issues out of ten problems they routinely face (“The Physicians’ Perspective: Medical Practice in 2008,” The Physicians Foundation, October 2008.)

Unfortunately, physicians and patients are in store for a good deal more of this bureaucratic fallout if health care reformers in Washington, D.C. have their way.


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David Hogberg
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