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Editor: Katharine Van Tassel
Akron Univ. School of Law

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Thursday, January 6, 2005

"Single-Payor System, Anyone?"

I am not necessarily a died-in-the-wool, bred-in-the-bone single-payor advocate, but consider this: As long as we are in the fractionated system we are in now, payors will always have an incentive to avoid paying one cent more than they are contractually obligated to pay (and to litigate the close-call cases as long as they win enough coverage disputes to pay for their litigation budget).  (Not to mention the outright cost-avoidance/cost-shifting behaviors that positively harm the health of their subscribers by postponing primary and preventive care in favor of more expensive acute and chronic care, the bills for which (they are betting) will be paid often enough by someone else to make today's denials cost-effective.)

So what made me think these dark thoughts about cost-shifting and the high administrative costs of our fractionated, multi-payor system?  A couple days of audit reports from DHHS OIG, posted Jan. 4 & 5:

  • "Review of Ambulance Charges Claimed By Caritas Norwood Hospital - Fiscal Years 2002 and 2003," (A-01-04-00520)
    EXECUTIVE SUMMARY:
    The Hospital was generally in compliance with Medicare regulations for claiming ambulance services costs.  However, we identified internal control weaknesses for completing medical necessity forms and for allocating ambulance costs between Part A and Part B on the cost reports.  We recommended that the Hospital develop written policies and procedures for completing medical necessity forms including regular training of physicians and other appropriate individuals on the Medicare requirements for establishing medical necessity and establish procedures to allocate ambulance costs related to inpatient transfers to Part A inpatient services.  The Hospital agreed with and has adopted corrective actions for each of our recommendations.
  • "Review of California's Internal Controls Over Costs Claimed For Medicaid Personal Care Services," (A-09-04-00036)
    EXECUTIVE SUMMARY:
    The objective of this review was to determine if the California State Department of Health Services (State) had internal controls to ensure that costs claimed for the Medicaid Personal Care Services program for the period July 1, 2002, through June 30, 2003, were in accordance with Federal laws and regulations.  Based on our limited review, we found that the State had internal controls to ensure that costs claimed for the Medicaid Personal Care Services program were in accordance with Federal laws and regulations.  In addition, the three counties we examined had internal controls to review and authorize individual provider time sheets related to personal care services.
  • "Review of Title IV-E Training Costs in Maine for State Fiscal Years 2001 Through 2003," (A-01-03-02503)
    EXECUTIVE SUMMARY:
    The objective of this audit was to determine whether the State complied with Office of Management and Budget (OMB) Circular A-87 and Administration for Children and Families (ACF) guidance in claiming Federal reimbursement for costs for foster care and adoption assistance training.  The State did not comply with OMB Circular A-87 and ACF guidelines.  Specifically, the State (1) did not allocate perservice training costs between the Federal and State programs, (2) incorrectly calculated the Federal share of indirect costs, and (3) inaccurately reported the amount claimed for Federal reimbursement.  As a result, the State misstated Federal claims for training costs during State fiscal years 2001 through 2003.  Identified errors resulted in $4.3 million in overstatements and $1.3 million in understatements, for a net Federal overstatement of $3 million.  We recommended a financial adjustment for $3 million and procedural improvements.  The State concurred with our recommendations.
  • "Review of Medicaid Claims for Patients Under Age 21 in Private Psychiatric Hospitals That Were Institutions for Mental Diseases in California During the Period July 1, 1997, Through January 31, 2001," (A-09-02-00083)
    EXECUTIVE SUMMARY:
    The objective of this audit was to determine if controls were in place to preclude California from claiming Federal Medicaid funds for medical services, except inpatient psychiatric services, provided to residents under age 21 in private psychiatric hospitals that were institutions for mental diseases.  We found that California improperly claimed Federal funds because it did not have controls to prevent claims for medical services.  As a result, from July 1, 1997, through January 31, 2001, we estimate that California improperly claimed $310,266 ($155,133 Federal share) for such medical services.  We recommended that California (1) refund $155,133 to the Federal Government; (2) implement controls to prevent Federal funds from being claimed for such medical services; and (3) identify and refund to the Federal Government any Federal Medicaid funds improperly claimed after January 31, 2001.
  • "Review of Medicaid Claims for Patients Under Age 21 in State-Operated Psychiatric Hospitals That Were Institutions for Mental Diseases in California During the Period July 1, 1997 Through February 28, 2001," (A-09-02-00084)
    EXECUTIVE SUMMARY:
    The objective of this audit was to determine if controls were in place to preclude California from claiming Federal Medicaid funds for medical services, except inpatient psychiatric services, provided to residents under age 21 in State-operated psychiatric hospitals that were institutions for mental diseases.  We found that California improperly claimed Federal funds because it did not have controls to prevent claims for such medical services.  As a result, from July 1, 1997, through February 28, 2001, we estimate that California improperly claimed $380,920 ($190,460 Federal share) for medical services.  We recommended that California (1) refund $190,460 to the Federal Government; (2) implement controls to prevent Federal funds from being claimed for such medical services; and (3) identify and refund to the Federal Government any Federal Medicaid funds improperly claimed after February 28, 2001.

I don't for a moment begrudge the federal government's desire to limit its costs and in general act as a prudent purchaser of health care goods and services.  Ditto the private payors who act on the same instinct.  But all of this fractionated diligence comes at a cost, not least the higher-cost health care provided to the uninsured through emergency departments already drowning in a sea of red ink.  Add to that the administrative costs associated with "contract management."  When, if ever, will we decide that it would be cost-effective to (a) expand our single-payor system for seniors (a/k/a Medicare) to everyone in the country, and at the same time (b) eliminate the need for most, if not all, of the administrative costs associated with the multi-payor system?  [tm]

http://lawprofessors.typepad.com/healthlawprof_blog/2005/01/singlepayor_sys.html

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Comments

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Posted by: bextra side effects | Jan 25, 2005 5:25:56 PM

Anyone who thinks a single-payer system is going to resolve the problems with health care in this state or nation is insane. Health care will become just another government commodity, like the public schools, prisons, and roads.

How many of those work well?

And for the notion that a single-payer system won't result in cost shifting, that's nonsense.

Ever hear of the "progressive tax code"?

All public costs are shifted.

Unbelievable. This single-payer thing is religion to some folks. I don't think most of us are going to drink your koolade.

Posted by: Tim | Jun 10, 2005 7:51:25 AM

Thanks for the article! I've found some useful facts and numbers for my college report))

Posted by: Ambulance Patient | Jul 7, 2005 9:44:20 AM

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