In another dog bites man finding:
Detecting Potential Overbilling in Medicare Reimbursement via Hours Worked
by Hanming Fang, Qing Gong
Medicare overbilling refers to the phenomenon that providers report more and/or higher-intensity service codes than actually delivered to receive higher Medicare reimbursement. We propose a novel and easy-to-implement approach to detect potential overbilling based on the hours worked implied by the service codes physicians submit to Medicare. Using the Medicare Part B Fee-for-Service (FFS) Physician Utilization and Payment Data in 2012 and 2013 released by the Centers for Medicare and Medicaid Services (CMS), we first construct estimates for physicians’ hours spent on Medicare Part B FFS
beneficiaries. Despite our deliberately conservative estimation procedure, we find that about 2,300 physicians, or 3% of those with a significant fraction of Medicare Part B FFS services, have billed Medicare over 100 hours per week. We consider this implausibly long hours. As a benchmark, the maximum hours spent on Medicare patients by physicians in National Ambulatory Medical Care Survey data are 50 hours in a week. Interestingly, we also find suggestive evidence that the coding patterns of the flagged physicians seem to be responsive to financial incentives: within code clusters with different levels of service intensity, they tend to submit more higher intensity service codes than unflagged physicians; moreover, they are more likely to do so if the marginal revenue gain fromsubmitting mid- or high-intensity codes is relatively high.
Back in the good ol’ days when we used to debate actual policy and not flinging monkey dung at each other, one of the claims advanced by advocates of single-payer healthcare was that the administrative overhead of Medicare was much lower than the administrative overhead of a private insurance system.
A few points.
First, overhead is still only a small percentage of the overall costs of health insurance and delivering medicine. If you eliminated overhead entirely, you would not do very much at all to reduce medical expenditures and certainly none of that would “bend the cost curve” since it would be a one time drop in the level of spending and not a change in the rate of spending.
Second, one reason for Medicare’s cost advantage, administratively, is that it already piggybacks onto the administrative overhead of the larger federal government tax collection and payment apparatus. So when we compare administrative overhead of the private insurers versus Medicare that is not exactly an apples-to-apples comparison.
Third, see the abstract above. High administrative expenses are not, ipso facto, evidence of inefficiency. A good deal of what the private insurers do is audit their providers to cut down on the nonsense like you see above. It is well understood that there is a large amount of fraud, waste and abuse within the Medicare system. A standard Medicare response to the findings above is to cut the reimbursement rates further, which paradoxically increases the incentives for doctors to defraud the system.
None of this is to suggest that private insurers are doing things perfectly, but it certainly is to suggest that more cowbell is not the solution.
And in other health care news … hospital mergers lead to higher prices to patients. Dog bites man. And of course, you know what the proposed solutions include – greater crackdown via anti-trust measures. While in a sensible world I might accede to that, it makes little sense to give even more power to an institution that is probably responsible in the first place for carving out exemptions for particular sectors, and has famously used its power to club companies for being successful and not for being anti-competitive. How about making it easier to start a hospital? How about allowing all kinds of folks to deliver medical services? If the problem is not enough competition, there is more than one way to skin that cat. But again, folks are not interested in fixing problems, they are only interested in fixing problems by increasing the power of the regulatory state. That won’t end well.