Medicare Future Sounds Like Medicare Past

Forbes published an article on December 11, 2019, after interviewing the Administrator of the Centers for Medicare and Medicaid Services (CMS), Seema Verma.  Ms. Verma itemized three focus areas:

  • the lack of healthcare cost and care transparency;
  • the accrued complexity of government healthcare regulations;
  • the legislative impediments to making responsive changes when presented with new circumstances

Ms. Verma has a tough job.  None of what I say below is out of

Seema Verma, CMS Medicare Administrator
Administrator for the Centers for Medicare & Medicaid Services, Seema Verma 2019. Photo Source: Politico

disrespect for her.   Nonetheless, because I have served as an expert witness on some of the largest Medicare fraud cases to date, I cannot help but see these initiatives as more of the same from the past.

One of the centerpieces of CMS’ vision is:

The proposed new rules would ease the compliance burden for healthcare providers, while maintaining safeguards that protect patients and programs from fraud and abuse. When finalized, they could facilitate outcome-based payment arrangements.

That is exactly the way Medicare Part C works today.  Yet, there have been multi $millions in detected fraud cases and likely a much higher amount that goes undetected.  While these plans are well-meaning, it has been easy for dishonest physicians to fraudulently diagnose patients with conditions that enable them to receive a fraudulently high capitated monthly payment, then treat the patient, and then reduce the severity of the diagnosis to receive a bonus payment for getting them well again.  These methods, called ‘risk adjustment’ can be beneficial but they also create multipliers that fraudulent doctors can abuse.

Second, Medicare policies used to determine what is medically necessary (a key determinant for coverage and payment) are inconsistent.  Imagine being able to get a fully covered non-emergency ambulance ride if you are under the influence of hallucinogenic drugs in Colorado, but being ineligible for the same ambulance transportation in Guam unless you are bed-confined due to a much more stringent coverage policy.  In the past ten years, LCDs in different jurisdictions have implemented exactly these types of policies.  The fact is that Local Coverage Determinations (LCDs), according to the HHS OIG are inconsistent and create inequitable access to care according to OIG’s 2014 report.

Third, if one is trying to combat fraud, a consistent set of LCDs needs to be used to apply a uniform Standard to what is medically necessary vs. what is fraudulent.  There are many loopholes that create vague interpretations.  Not that all fraud is proper nor that it cannot at times be detected, but Medicare’s own policies have limited its effectiveness.  Many $billions have been wasted on fraudulent and undetected payments by Medicare.

This should be a non-partisan issue.  These issues are not Obama administration or Trump administration issues, they have been this way for decades across Democratic and Republican administrations.  It is time for a change and some truly new thinking.  Perhaps fixing what we have will be better than creating more and new legislation and policies.

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Michael F. Arrigo

Michael Arrigo, an expert witness, and healthcare executive, brings four decades of experience in the software, financial services, and healthcare industries. In 2000, Mr. Arrigo founded No World Borders, a healthcare data, regulations, and economics firm with clients in the pharmaceutical, medical device, hospital, surgical center, physician group, diagnostic imaging, genetic testing, health I.T., and health insurance markets. His expertise spans the federal health programs Medicare and Medicaid and private insurance. He advises Medicare Advantage Organizations that provide health insurance under Part C of the Medicare Act. Mr. Arrigo serves as an expert witness regarding medical coding and billing, fraud damages, and electronic health record software for the U.S. Department of Justice. He has valued well over $1 billion in medical billings in personal injury liens, malpractice, and insurance fraud cases. The U.S. Court of Appeals considered Mr. Arrigo's opinion regarding loss amounts, vacating, and remanding sentencing in a fraud case. Mr. Arrigo provides expertise in the Medicare Secondary Payer Act, Medicare LCDs, anti-trust litigation, medical intellectual property and trade secrets, HIPAA privacy, health care electronic claim data Standards, physician compensation, Anti-Kickback Statute, Stark law, the Affordable Care Act, False Claims Act, and the ARRA HITECH Act. Arrigo advises investors on merger and acquisition (M&A) diligence in the healthcare industry on transactions cumulatively valued at over $1 billion. Mr. Arrigo spent over ten years in Silicon Valley software firms in roles from Product Manager to CEO. He was product manager for a leading-edge database technology joint venture that became commercialized as Microsoft SQL Server, Vice President of Marketing for a software company when it grew from under $2 million in revenue to a $50 million acquisition by a company now merged into Cincom Systems, hired by private equity investors to serve as Vice President of Marketing for a secure email software company until its acquisition and multi $million investor exit by a company now merged into Axway Software S.A. (Euronext: AXW.PA), and CEO of one of the first cloud-based billing software companies, licensing its technology to Citrix Systems (NASDAQ: CTXS). Later, before entering the healthcare industry, he joined Fortune 500 company Fidelity National Financial (NYSE: FNF) as a Vice President, overseeing eCommerce solutions for the mortgage banking industry. While serving as a Vice President at Fortune 500 company First American Financial (NYSE: FAF), he oversaw eCommerce and regulatory compliance technology initiatives for the top ten mortgage banks and led the Sarbanes Oxley Act Section 302 internal controls I.T. audit for the company, supporting Section 404 of the Sarbanes Oxley Act. Mr. Arrigo earned his Bachelor of Science in Business Administration from the University of Southern California. Before that, he studied computer science, statistics, and economics at the University of California, Irvine. His post-graduate studies include biomedical ethics at Harvard Medical School, biomedical informatics at Stanford Medical School, blockchain and crypto-economics at the Massachusetts Institute of Technology, and training as a Certified Professional Medical Auditor (CPMA). Mr. Arrigo is qualified to serve as a director due to his experience in healthcare data, regulations, and economics, his leadership roles in software and financial services public companies, and his healthcare M&A diligence and public company regulatory experience. Mr. Arrigo is quoted in The Wall Street Journal, Fortune Magazine, Kaiser Health News, Consumer Affairs, National Public Radio (NPR), NBC News Houston, USA Today / Milwaukee Journal Sentinel, Medical Economics, Capitol ForumThe Daily Beast, the Lund Report, Inside Higher Ed, New England Psychologist, and other press and media outlets. He authored a peer-reviewed article regarding clinical documentation quality to support accurate medical coding, billing, and good patient care, published by Healthcare Financial Management Association (HFMA) and published in Healthcare I.T. News. Mr. Arrigo serves as a member of the board of directors of a publicly traded company in the healthcare and data analytics industry, where his duties include: member, audit committee; chair, compensation committee; member, special committee.

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