Heathcare

Fraud + Abuse

There have been some eye popping headlines lately about the use of kickbacks to induce physicians and others to refer patients. Apparently, the FBI has just scratched the surface.

Kickbacks are career ending for healthcare professionals and cause significant issues for the company and investors involved. As someone who has experienced the organizational fallout, it’s a lesson that you don’t easily forget.

I worked for an organization under the first OIG settlement for use of kickbacks and other practices deemed abusive. What I learned is that people cross the line when they are under pressure to meet financial targets. 

Investors expect two things from leaders: growth and/or profitability. So I thought it might be helpful to frame the fraud and abuse risks that way too.

Growth:

A focus on growth increases the risk of kickbacks. To minimize the risk, you should have a process in place to:

1/ Identify all your potential referral sources. 

Potential referral sources are physicians, organizations owned by physicians or a family member and others who can influence patients.

2/ Review all the payments made to the potential referral sources to ensure they are supported by a contract. Contracts need to be reviewed for:

  • The nature of the agreement
  • The payment to ensure it reflects fair market value for the services rendered
  • The documentation requirements

3/ Review the documentation for services provided to ensure the services were actually provided in accordance with the contract.

4/ Educate those contracting with a potential referral source on the risks and requirements.

Profitability:

The shading things some people will do for their own gain is almost limitless. 

To minimize risk you need to be constantly looking at the financials, asking questions and validating the answers when something looks off.

With that said, the most vulnerable numbers are the revenue numbers.

1/ Trend and benchmark the charges

2/ Review the number of changes to the charges and the timing of the changes

3/ Review the methodology for contracted write-offs and discounts 

4/ Watch for deviations from the methodology

Potential issues:

1/ Out-of-network strategy 

2/ Over utilization

3/ Additional outlier payments 

4/ Tucking and smoothing to meet financial targets

All of these issues are problematic. The underlying reason and business practices will tell you how problematic.

The Risk is Real

For me, the most memorable cases is that of Richard Scrushy, Founder of HealthSouth and felon. Yes – felon.

Richard and his inner circle intentionally misstated HealthSouth’s revenue numbers by $2 Billion before the problem was uncovered.

The numbers alone make it memorable. However, the problem surfaced just after we launched our online training programs that focused on all the processes needed to accurately report revenue. The case validated our why.

The government is now using data and AI to catch fraudsters. It’s a good time to make sure your I’s dotted and T’s crossed and that you have a process in place to keep them dotted and crossed.

Operating in the Grey

Morally wrong but not illegal. That’s the fine line that many companies walk.

There is a really good documentary called the Drug Short that uses the story of Valeant to explain the problem with drug pricing in the US.

Valeant operated more like a hedge fund than a pharmaceutical company. The model was pretty simple:

1/ Buy companies that have a drug with a monopoly.

2/ Strip out the R+D so that the typical 18% spent on R+D goes to the bottom line.

3/ Raise prices on existing drugs.

The problem is that many of the drugs were life sustaining drugs for people in middle America who couldn’t afford to pay for them. 

So the company took extraordinary measures to bilk insurance companies into paying for the prescriptions. To keep patients quiet about the issue, they provided just enough financial support to them through their advocacy efforts.

Hillary Clinton started tweeting and talking about the issue during her campaign. Investors and board members could have looked into it and taken action, but they didn’t. They were reportedly paid large sums to look the other way. 

The returns on biotech companies now are largely due to price increases. The companies can’t afford to lower their prices and profits.  So nothing has changed.

Food + Health

Have you read or watched the documentary called Food Inc.? It is eye opening.

The US government reportedly subsidizes farmers to produce large amounts of corn below cost. Corn and corn bi-product is found in everything we eat – from meat to sweets.

The problem is that it’s having an effect on your health and wellbeing for a number of reasons:

1/ Your weight: Corn is being fed to chicken, pigs and cows to make them grow faster. The additional weight impairs their organs, their ability to move and in some cases, life expectancy.

2/ Your health: The way growers [aka: farmers] work, they are contaminating the environment with hazardous waste that ends up in the food supply during processing. Unfortunately, the way meat is massed processed, there is no way to trace the contamination back to the source in a timely manner. Hence, wide spread outbreaks of e coli and untimely recalls.

3/ Your job: There was a time when a meat processing job was a good paying American job – not anymore. It’s one of the most dangerous jobs and often performed now by undocumented workers. Some of the undocumented workers lost their corn farms due to US policy.

The Food lobby is strong which is why you don’t hear much about these issues in the news. Overcoming the impact is definitely a challenge for the healthcare industry.

Triple Aim

The Canadian healthcare system is undergoing a similar digital transformation as the US.

Even though the healthcare systems are different in how they are financed, the triple aim of the transformation is for the most part the same.

The triple aim:

1/ Enhance the patient experience

2/ Reduce the cost of care

3/ Increase population health

A couple of differences to note:

1/ Patient vs. Consumer experience: The US has been trying to engage patients in consumer type behavior to help lower the cost of care. The jury is out on whether it’s having the intended effect or not. However, the word consumer resonates even less in a Canadian healthcare context even though many also have private insurance and pay some healthcare costs out-of-pocket.

2/ Clinical experience and productivity: The 4th aim in Canada whether official or not, is about making things easier for clinicians in order to utilize their time effectively and to reduce the risk of errors. Given the number of reported issues with EHRs and physician burnout, most US physicians would likely sign on to that aim too.

Regardless of country, it’s hard to manage risk in large scale transformations without stifling innovation. There are differences in how the risk is being mitigated and managed. I will touch on that too.

2020 Reform

Americans have a huge opportunity to get healthcare right in 2020.

The current system is broken. Access is limited by the lack of coverage and/or the cost of healthcare.

Medicare for All would make healthcare more accessible to all American even though access has yet to be defined in terms of who and what.

Getting who and what right is the first opportunity. If the benefits are too rich, the system will become unsustainable. Reportedly, Canada is spending 60% of all tax dollars on healthcare and have reached their maximum budget. They too are trying to address the rising cost with the triple aim.

The Republican concerns are real if other measures are not taken to curb the cost of healthcare.

Expanding access helps reduce the cost/person if people use the system to better manage their health and thereby reduce the need for expensive medical intervention.

For the theory to work:

1/ Self-Care: Americans need to take a more active role in managing their health and wellbeing.

2/ Primary Care: PCPs need to engage as health coaches rather than just as gatekeepers to specialists and pharmaceuticals.

3/ Coverage: Insurers need to cover self-care apps + devices.

The opportunity in 2020 is to present a new system that focuses on health and cares for the sick when needed.

Risk Pools

Risk pools are a powerful tool but they have been incorrectly within the healthcare system.

Risk Pools are a way for insurers to share the medical responsibility and financial risk with healthcare providers for managing a defined patient population. It rarely goes well.

Providers have a few big issues:

1. Insurers have premiums and investment vehicles to absorb risk pool loses. The risk pool is a limited amount of money with no means to increase the available funds. Providers end up rationing care.

2. Managing the risk pool is about predicting future medical events. The technology and methods providers use are getting better but still pretty limited.

3. The conversation between doctors and patients is changing. Patients are more informed of experimental therapies. Telling a patient NO when there is even a remote shot of something working would be tough for someone who is invested in the relationship.

Given that many insurers are becoming provider organization offering health coaching and preventative care, risk pools would be better used between the government and insurers as a way to incentivize them to keep people healthy.

The government is also better positioned to improve access by providing the Stop Loss insurance for patients with genetic issues.

Political Risk

Lower cost is one element of the triple aim. How does your company’s values address the cost of healthcare?

Cost is a big issue for the 2020 election. Some of the government findings about healthcare pricing and billing practices are clearly an issue that could blow back on companies that aren’t proactively addressing cost.

What are patients being promised about the cost of their care? Is your company promising the lowest cost, a market rate or a high cost for a premium service? There is no one right answer but patients need to know what your company is promising. Why?

Stakeholders have the ability to influence government action now more than ever thanks to social media. Social pressure from stakeholders including patients, employees and employers will force the government to regulate the reported problem. We’re seeing it now with proposed regulation for pricing and billing practices.

Leaders of companies should be thinking about:

1. Risk profile as it relates to cost.

2. Prioritizing cost as a risk and integrating it into their values + strategies.

3. Mitigating existing risk.

Companies that don’t will expose themselves to unnecessary political and reputation risk by not making a clear statement about cost.

AI in healthcare

One of our clients would always say “think about sitting in your big easy chair.” I definitely thought about it but never experienced it. Why?

For reasons similar to the premise behind AI. I streamlined and automated a lot of workflows for the organization so that the staff focused on the more complex issues and higher value work.

Today automation replaces about 25% of the routine transactions. AI may replace another 20%. There will always be work to be done which is why you shouldn’t put too much thought into that big easy chair yet.

The difference is that automation and AI increases productivity so that companies have the resources needed to do more. So the long story short, is that AI won’t replace jobs but it likely will change what people do and how they do it. The win is that higher value work pays more.

Non-clinical tasks will likely change first because the health and safety risk for AI is lowest. Leaders should start considering the potential impact on non-clinical workflows now and plan accordingly.

The aim of medicine is to prevent disease and prolong life; the ideal of medicine is to eliminate the need for a physician.

Dr. William W. Mayo

Now – Near – Far

Now – Near – Far is a strategic framework that some executives of legacy healthcare systems are using now.

The framework was developed by James Hackett, CEO of Ford to assemble and align the resources needed to deal with disruptive market forces.

1. Now – Assembling and aligning resources for the Far.

2. Near – Executing on the strategic plan in a way that continuously meets the expectations and needs of patients.

3. Far – Imagining who your patients are, what they will need, what they will expect and how you can serve them.

The problem for some executives is that they are not thinking about the Far and may in fact be brushing it off as something they have seen before. However, the consolidation and emerging technology will eventually result in disruption to the status quo.

The threat for the legacy healthcare systems is the vertical consolidation of outpatient providers and insurers. The resources of the combined entity and the lucrative services provided will make them hard to beat.

Uber didn’t start with Pool. Uber started with a resource some people already used and made it easier to use. Then they offered cheaper options to capture more marketshare.

If something sounds too crazy to work. Don’t brush it off. Think about the possibility.

Medicare for All?

Medicare for All vs. Single Payer System

62% of Americans support the idea of “Medicare for All” even though it’s not clear what it would cover, who it would cover or how it would be administered.

So what are people finding so appealing about it? The number of people supporting a single payer system is lower. Reportedly, only 48% of Americans want a single payer system even though the two are similar in concept.

Is that people understand Medicare coverage because they have had some experience with it or in their minds is there a fundamental difference?

Single payer systems are often plagued with access issues because all the resources are being consumed by older and sicker beneficiaries. However, if something is urgent and life threatening, it gets taken care of quickly. In short, it’s reactive care. That’s probably the scary part of a single payer system for most.

However, what few realize is that many of the single payer systems around the world have a commercial layer that provides access to complimentary care providers who help keep people healthy. Interestingly, the plans are often provided by employers and include luxury benefits like massage therapy.

Single payer vs. Medicare for All: What’s the difference to you?