How Medicare Funds are Wasted

[EDITORIAL NOTE: I am in New York City today for an appearance on the Brian Lehrer Live show at 7:30PM ET to discuss elderblogging. New Yorkers can watch on Time Warner CUNY-TV channel 75. Everyone else who is interested can catch the live, online, video feed here. There is a list of television rebroadcast times on the website where the program video will also be archived.]

For a fee of $5, the City of Portland, Maine, where I live, annually provides flu shots available over several days in different locations throughout the city. On 8 November 2007, I went to City Hall where tables were provided on one side of a room for paperwork, and on the other side for technicians to administer the vaccine.

One form requested my Medicare number. When I turned in the forms, I asked where to pay the $5.

VOLUNTEER: Oh, Medicare will pay that.

ME: But I have a five dollar bill right here. It will save a lot of paperwork if I just give you the $5.

VOLUNTEER: Why use your money when Medicare will pay?

ME: It’s only five dollars and like I said, it will save paperwork and mailings.

VOLUNTEER: You save your money for something you need. Medicare will pay.

She defeated me. The line of people was at a standstill and there was no point in arguing further. I took a seat to await my turn for the shot.

A few days ago, paper – of course, paper – arrived in the mail from the Centers for Medicare and Medicaid Services. Here is the accounting for my November flu shot:

$13.21 - 1 Flu vaccine
$19.37 - 1 Admin influenza virus vac

$32.58 - TOTAL

According to the Medicare accounting, this amount was paid to the City of Portland, Health Division. I had no idea the City would bill Medicare for more than the $5 charge, and now I’m wondering what the $5 is for and who does pay it.

It likely offsets the price a little for people who are not yet old enough for Medicare (although I didn’t notice money changing hands even among the young), and I would have been happy to contribute $5. Hell, I’d have paid the entire $32.58. It’s a bargain not to be down and out for three or four weeks which is how long I was sick last time I had the flu a decade ago. And according to stories in the local paper, budgets are tight here, as they are in most municipal governments.

But one item in that accounting nags me – nearly $20 to administer the shot.

The technicians were moving us through their vaccine assembly line at the rate of one person every five minutes. Do they earn $240 an hour? (If so, I’ll take the job.) Even subtracting the price of one cotton ball, a few drops of alcohol, a pair of latex gloves and a little round Band-Aid per person, someone’s overcharging Medicare for this operation. Multiply that by millions of people throughout the U.S…

Well, you get my point. And if the charge is being padded to Medicare on something as inexpensive as flu vaccine, how much is being added to more costly procedures?

Some other items to ponder:

• Hardly a week goes by without at least one news story about someone or some organization accused of Medicare fraud. It is not sensible to believe all are caught.

• No doubt you saw last week’s grim report on the future of Medicare. Spending is expected to outstrip contributions by 2019.

• In accordance with the prescription drug benefit (Part D) legislation, Medicare is prevented from negotiating prices with pharmaceutical companies.

• Medicare subsidizes Medicare Advantage plans (private Medicare) by paying the private insurance companies that operate them up to 18 percent of costs.

Preventing price padding, fighting fraud, allowing (nay, requiring) drug price negotiation and abolishing private Medicare (or, at least, the subsidies) wouldn't solve all the Medicare woes, but many millions of dollars would be returned to the kitty.

Of course, what is really needed is Medicare for everyone – universal coverage that all pay into and all benefit from.

[At The Elder Storytelling Place today, David Wolfe gives us a story that will make everyone smile, My First Kiss.]

Comments

[Ernestine]

A young lady who has been staying in my son's home over the last 3 months left for home yesterday. My son is in Thailand at this time. She was in Nashville to attend classes at Vanderbilt University to do some special studies for her degree.
She is from the Netherlands.
She spent a lot of time with me since my son's home is across the street from my home.
She shared that all medical and educational cost were paid by the government. I am not familiar enough with this to share more. I did think that must be nice.
I do know that tests that I had to go through a month ago for a possible lung problem came with a cost of a little under $10,000.
Yes, paid by insurance. But I shake my head that tests that took only a few hours came with a price tag like this.

[Anne]

here in Canada we do have universal health care, and the side effect of that is that I have no idea what the different tests, procedures, and doctor visits actually cost. The advantage to me of you (Americans) not having universal health care is that occasionally I get an idea of the value of what I get "for free" (not really, but might just as well be).

But who knows the real cost. Presumably the price tags you get to see are padded or artificially calculated anyway.

I have a friend from the Netherlands too. Let's not talk about what they have that we don't, it's depressing. Oh well, I hear they are sinking under the rising seas of climate change. Soon we won't have to listen to that! (kidding)

[Mary Walker]

The story of Ernestine's visitor from the Netherlands reminds me of a '60 Minute' feature a couple of weeks ago about Denmark. There everyone is covered by a state medical program and everyone gets free education up to and including university. The tax rate is 50%. But I for one would be glad to pay a 50% tax rate if it meant I did get medical care and didn't have a crushing student loan.

[Nancy]

Last Fall ,my husband had a regular appointment with his doctor (Blood pressure,weight,etc.)

We decided that I would go with him because afterwards we were going to the Mall Health Department for our free FLU SHOTS . Our County sets up the site at our Mall and you just go and they give you the shot free of charge or paperwork.

While my husband was in with his doctor, I waited and was reading a magazine when the nurse came out and said the doctor wanted to see me. WHAT? So, when I went in the doctor said, "I can give you your flu shot right here. You don't have to bother going to the mall. I have just given it to Roy." Well, I allowed him to give me the shot.

Two months later I get the notice from Medicare with the charges. The doctor had charged Medicare $40.00 each for the shots that I could have gotten free that same day and only two blocks away. I was furious...
No wonder Medicare is in financial trouble when doctors are pulling stunts like this.

That doctor gave me the impression that he would provide me the same service that the Health department would provide and at no charge. I was duped, but never again.....

[Linda]

As much as I hate to see it, I am afraid that greed has corrupted a significant portion of society. Greed in an economy works like a parasite. If too many who participate in the economy inflate the worth of their contributions and/or scam their consumers, a tipping point maybe reached where the economy collapses. I'm afraid that the housing mess is an example of that. A significant (nobody knows what that percentage must be)number of those in the economy must believe in the basic integrity of system so that their behavior is governed by the moral principles that ensure the health of the system. If we lose that faith in the morality and fairness of the economy, it will fail.

I am 67 and no longer working, but I was a university professor and an andministrator. I was amazed as I observed increasing numbers of my colleagues who engaged in practices that were clearly dishonest and greedy as they drove their university salaries higher and higher until now the average salary for a full professor in some state systems is almost $200,000. I always had grants from the federal government to and was dumbfounded at the bookkeeping tricks commonly used to milk the money for personal gain.

I am afraid that the economy will reach a critical point of just too much lying, too much stealing, too much doing "what everybody else does"!

[Darlene]

Ronni, your experience is, as you know, just the tip of the iceberg. I got a statement from the hospital that did my cochlear implant and the total bill was $112,000 for outpatient surgery. I thought that this was an outrageous amount and called requesting an itemized bill. After a month it had not arrived so I wrote requesting it again. After two months I still don't have it and am sure I will never get it. I feel that Medicare is being overcharged and I don't know where to complain.

This is just one more example of why we need a single payer system.
By having control of what can be charged for each procedure and with the government in full charge of buying the medications and, therefore being able to get a bulk rate, the costs would go down and fraud would be easier to find and stop.

[Rain]

It's a frustrating situation and will be that way if we go to universal coverage unless we have a complete revamping of the system-- something PACs are doing everything they can to prevent happening.

[George P]

After the election in 2006, when the Democrats gained a majority in Congress, they tried to pass a bill to require Medicare to negotiate the costs of prescription drugs, just like the VA does. But our compassionate-conservative President Bush threatened to veto any bill that would require this. Since the Dems didn't have enough votes to override a veto, the bill died.

Way to go "Shrub."

[joared]

Yeah, Medicare is abused everywhere and in a multitude of ways. As a therapist I am paid less than half what the final bill is that Medicare pays for my serices -- too many middle people. When they start talking about cutting back the fees Medicare pays for therapy, the therapist is the one who takes the hit. Paperwork billing is a nightmare which some of those middle people do, however, because it's a nightmare with ever changing documentation codes (many of which don't even accurately describe what the service is,) instructions and requirements -- including the paper work the therapist must provide in the first place (the latter, is at least a bit more streamlined than when I started working about thirty years ago.

I don't understand all the different amts that are charged for the flu shots either. Our hospital sets up a drive thru at the L.A. County Fairgrounds and we literally drive-up, stick out our arms, get our shot, then go on our merry way -- no paperwork, no questions, no charge. Meanwhile, local Sr. Centers offer the shots at other times, HMOs set up shop in Drug stores, and I've seen signs that charge $30 for the shot (probably to pay the shot-giver.) It's crazy!

One place to start lowering health care costs is to DEMAND that Medicare be required to negotiate with pharmaceutical companies (yeah, that means Congress has to act.)

[Chancy]

Congress really screwed up the Prescription Plan D of Medicare by doing this:

"In accordance with the prescription drug benefit (Part D) legislation, Medicare is prevented from negotiating prices with pharmaceutical companies."

What were they thinking? I am so tired of all the lobbies owning our government that sometimes I want to scream...

But I guess it is better to laugh instead. Worry too much and I will need ANOTHER blood pressure pill.

[Sara Hopkins]

Hi, Ronni, thanks for writing about this. A small thing and yet so very indicative of what is wrong. I have emailed a link to your blog to our three presidential candidates. Who knows what good that will do...and yet why not? It was interesting that it was easiest to leave a comment on Hillary's site than on the other two!

[mary jamison]

When my Mom was alive and had Parkinson's Disease, I belonged to an int'l listserv for PD caregivers. One European, after listening to the kind of struggles we Americans have getting health care, wrote, "What is the benefit of living in the richest country in the world?"

[SuzyR]

My husband has severe Alzheimer's Disease and is enrolled in hospice. At this point, all he needs is a visit from a nurse twice a month (we have a friend who provides personal care, such as showering/shaving and running errands; otherwise hospice would provide those services, too).

Hospice bills Medicare almost $4,000.00 per month(!) for the two nurse visits.

When I talked with the hospice administrator in our area about my discomfort with the monthly cost, she said because my husband has paid into Medicare, he's entitled to receive the care at that monthly cost.

My point to her was that there ought to be a sliding scale for how hospice bills Medicare; bill less for those needing less care, etc.

I considered disenrolling my husband from hospice, but we do need a backup plan for his care in the event our friend has to go out of town or whatever.

Private duty nursing care comes at too high a cost for us, so it looks like I'll have to stick with hospice as a backup.

Isn't anyone overseeing how Medicare spends its funds? Perhaps the $4,000.00 per month is "right on the money," perhaps it equalizes out over all hospice patients and therefore is a fair monthly cost. And, yes, hospice is funded primarily by donations so the funds coming into hospice from Medicare are not enough to sustain the program. But still and all, the monthly cost does see excessive, at least in my husband's case.

[SuzyR]

P.S. I proofed my above comment, but missed "see" in the last line. Should be "seem," which seems obvious I'm sure.

[Somewhere in Texas]

Here's some of that 'Medicare' money. But we can be proud of the fact that these guys run non-profits. They suck up Medicaid funds as though it were the money were 'government money' (It is our money, folks, ours. The taxes we pay.)

For one: Banner Health CEO Peter Fine made nearly $3,000,000 (3 million dollars for those that feel non-profits need to have highly compensated CEOs.)

That is just one example. Want more?

wherethemoneygoes.com

My particular hobby-horse is enormous profits made by non-profits. I don't buy the 'must have big salaries because they bring in big donations!' This is a ludicrous, straw-man, argument that at least one of you has fallen for. That is just the hook line and sinker you have swallowed from the marketing machine in the non-profit industry. What percentage of the incoming money should they get to garner? Is there an upper limit? What bugs me is the whining about corporate CEO salaries. Sure some are jerks, and they take companies down. But some are responsible for the enormous (legitimate) profits in their companies. IBM, General Electric, Dow chemical, Exxon (like them or not, they make money).

You think that socialized medicine is going to be any better? How about this:

Calgary Health Region (yes, Calgary is in Canada) CEO Jack Davis made $1,006,000 in 2006. What the heck for? He's just an administrator.

Oh well. Go ahead and vote for socialized medicine, and you will get what you deserve. Even more corruption. Obama's wife made $316,000 in 2005. Not chickenfeed. Not to me, anyway.

Of course these highly compensated individuals will always have a private room (with oriental rugs, flat screen TV, hot and cold running nurses) in one of the more glamorous 'not for profit' hospitals when they or members of THEIR families get sick. But no doubt they 'need' special care because they bring in so much money, right?

My ex is a hospital administrator (CEO in a not-for profit) and I've seen the private suites. Unless you have the key, you aren't going to see them, however. But 'celebrities', of all sorts, need special treatment don't they? After all, they do so much for us! This special treatment will not change with socialized medicine. (Ever read Animal Farm? Still relevant after all these years.)

You DID pay way too much for a flu-shot (the GOVERNMENT paid too much). That is the way the Medicaid mafia works. Small change. But enough small change ends up making a pile of real money.

[Taru]

Medicare Part D stands for Medicare Part Dumb. I have been on a particular thyroid medication for over 20 years as it is the only on that works for me. It is quite inexpensive, around $10 for a month's supply. When I tried to get it refilled, my pharmacy said my Part D insurance did not cover it (although it had in 2007). When I call the so-called insurance company I was told I had been switched to a "generic plan" for 2008 (unbenown to me because I didn't receive my 2008 info until mid-January; way too late to change to another carrier.

So, they insisted I go back on a more expensive synthetic thyroid (requiring a Dr's visit), wait until it didn't work (translated to mean until I got symptoms and felt crappy), visit the Doctor again and THEN, MAYBE they would approve the less expensive natural thyroid med that I already know works.

When I protested, they said I should find the old medical record that showed the synthetic thyroid was ineffective. Of course, being 65 and this happening when I was probably 45 (maybe younger) made it impossible to track down the medical record.

I've opted to pay for the drug that works out of my own pocket and save the government two doctor visits, a more expensive drug, and my potential heart attack expenses caused by the extreme anger I experienced when this incident happened.

Our health care system is broken, and a few people are getting rich off of it while the rest of us struggle with a system that creates more stress and hence more illness!

[Alice]

(Just catching up on my reading today!) I keep meaning to post my own story about gouging Medicare I'm sure you'd appreciate: I had a persistent ringing in my good ear and knew I should have it checked because my "bad" ear has about 50% hearing loss; gotta take care of the "good" one, right? Well! All the good doctor did was clean both ears, take a hearing test, tell me something I already knew--how important it was to keep my bad ear DRY--and told me about a good ear drop to help do that. No Rx. The cost for this? More than $700! To cap it off, a day or two later my "bad" ear started draining. Took me six weeks to finally get the Rx for that drop he told me about without going back for another exhorbitant charge. Guess what that ear drop cost? A tiny body (7.5 ml) was $120! Ain't our health care providers and pharmaceutical companies wonderful?

[Alice]

(Excuse me! that tiny body should be tiny bottle.)