Fraud and Abuse

Over the last 35 years, there have been a lot of attempts to slow the growth in Medicare expenditures, which have continued to soar unabated because of poor policy making by both parties. 

Although the Budget Control Act of 2011 (S. 365) says the Joint Budget Committee that will try to agree on the next round of budget cuts won't be allowed to change Medicare's benefits, I think it should.

Here are some ideas for changing Medicare that would give consumers and providers strong financial incentives to increase access to care and higher quality care at lower costs per patient and per enrollee.

1. Means testing should be introduced to Medicare. 
2. Premiums should be upped 50% to 100% for the wealthiest beneficiaries, provided that they are allowed to buy non Medicare insurance in place of the lousy Medicare plan. That would take 5 million to 15 million of about 47 million beneficiaries out of Medicare and save billions, if not trillions.
3. The WSJ Health Blog reported on a study that estimated that defensive medicine costs $46 billion a year, or $460 billion over 10 years and growing. Tort reform is imperative.
4. Strip the pork and new public sector jobs built into ObamaCare from the budget and save close to $1 trillion.
5. Revamp Medicaid so that it serves the truly poor, and not every special interest group that votes Democrat. Save billions for the states and federal government.
6. Strip useless preventive care from Medicaid and Medicare and save more billions. Provide only the four preventive care services that actually save lives. Note that I've blogged on a Krauthammer column that reported that preventive services increase health care costs 162%. http://tiny.cc/k4hck
7. Stop using Medicare to subsidize over-staffed inner city and teaching hospitals and save more billions.
8. Reduce Medicare/Medicaid reimbursements for providers' payments to GE and its competitors for equipment maintenance contracts and save more billions.
9. Give consumers on Medicare and Medicaid strong financial incentives to buy reasonably-priced Medicare and Medicaid insurance plans and save more billions.
10. Stop all subsidies to people who want and buy Medicare Advantage plans and to the insurers who offer those plans and save more billions.
11. Spend more on fraud and abuse enforcement for M/M and save more billions.
12. Give workers stronger financial incentives to save for their health care expenditures after they reach 65 and save more billions.
13. Reimburse hospitals for only 50% of the health insurance premiums that they pay for employees. Many hospitals pay 100% of their workers' insurance premiums, which are soaring like everyone else's.

Medtronic (MDT) is paying a $75 million fine to settle a Medicare fraud and abuse claim against Kyphon Inc., which it acquired last November from me and a bunch of other happy Kyphon shareholders.

Of course, Medtronic didn’t commit the fraud and abuse, so its integrity can’t be challenged because of the claim, which it knew about when it bought the company.

And none of us outside shareholders were involved in the fraud and abuse, but we sure made a lot of money when Medtronic acquired Kyphon. We might have made a bit more if the company hadn’t been the subject of a fraud and abuse claim at the time of the acquisition.

So, how do I feel about having made money on a stock when the company wasn’t operating ethically?

Yucky. Disgusted. And frustrated that some of the people who were running a successful company like Kyphon felt they had to be unethical or didn’t care if they were.

As a ethical businessman and a taxpayer, I’m glad that a whistle blower had the integrity and courage to alert the government about the fraud and abuse and that whoever was involved in committing the crime will live with their personal shame for a long time.