Health Care Payments

DRG base payment formula. Reaching across Arizona to provide comprehensive quality health care for those in need.

I’m writing this Sunday night (November 1st) and you won’t read this until Thursday, so let’s skip talking about the election results. But I would like to examine a recent statement by our President. He is our President and will be until January, or for four more years, depending.

Mr. Trump said at a rally in Michigan last week, “Our doctors get paid more money if someone dies of Covid. You know that right? Our doctors are very smart people.”

The press called the statement false and baseless. It is offensive, unless you think people all act like our President, that is only look to enrich themselves. But it is not entirely baseless, nor false.

Here we get to talking about how healthcare is paid for in this country. If you’re filling up your Molotov cocktails or loading your high capacity magazines, you can skip this. But I have been a critic of our health care system for too long to pass up this opportunity. Thank you, Mr. President.

When Medicare patients are admitted to a hospital and cared for, the hospital receives payment based on a VERY complicated formula, but the main feature of the payment has to do with the discharge diagnosis. Thus, if you are a Medicare patient, get pneumonia, and are hospitalized, the hospital gets paid a flat amount whether you are there for 2 days or 5 days.

The formulas are always being tinkered. Each year an independent body reviews payments and costs and fudges the formula. Most rural hospitals don’t operate under this payment system, since they are designated “Critical Access”.

So, what does this have to do with Covid? Well, the $2 Trillion CARES Act, which Congress passed last spring and President Trump signed added a 20% premium to Medicare payments if there was a Covid diagnosis. Here’s the rub: “diagnosis” wasn’t clearly defined. Some states only allow a laboratory confirmed diagnosis, other states use a “provisional” diagnosis. Maybe that’s what our President was alluding to. Honestly, I don’t think he even knows.

In fact, this Medicare payment system (not the CARES boost) has kept cost increases to about the rate of inflation. At the same time, private insurance costs have grown at a rate double or triple inflation. So, I’m not suggesting we blow this up. Fifty percent of health care costs go to hospitals and physician payments. Medicare’s cost containment strategies on hospitals has been a long road, but I can say it has had some success.

As our President has suggested, some may game the system. But if we pay attention, apply some discipline and keep working at it, the bad actors can be squeezed.

I am not unfamiliar with bad behavior in my profession. We did month long rotations in the ER during residency; twelve-hour shifts, seven days a week. I fell asleep standing up late one night while listening to a little old lady. I probably wasn’t making good decisions in that state.

There was a new doctor to the group that taught us residents. I examined a little boy with a small cut above his eyebrow. The boy whimpered in his mom’s lap. “Do you think he need stitches?”

The cut was about a quarter inch long and not bleeding anymore. I said I’d check with the attending but it didn’t look like it to me.

I told the new doc about the kid. “The wound isn’t gaping or bleeding. A band aid will do.”

He frowned, came into the ER bay, bent down and pulled the edges of the wound apart and the blood dripped out.

“No, that will need a stitch.” He said to the mom.

As he left me to sew up the scared little boy he whispered to me, “That’s the fastest $200 I ever earned.” Maybe our President knows this doctor. I no longer do.

About ddxdx

A Family physician, former county coroner and former Idaho State Senator
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