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Aside from fraud and abuse associated with telehealth, the future of this technology is astonishingly bright and innovative.

Responding to COVID-19, the Department of Health and Human Services (HHS) changed the rules to allow Medicare billing for some telehealth services. It recognized the “urgency of this situation,” and that “some pre-existing Medicare payment rules” could inhibit use of technologies that “might otherwise be effective in … the pandemic.”

During the Public Health Emergency (PHE), providers were “allowed broad flexibilities to furnish services using remote communications technology.” Using telehealth was seen as potentially helping stop the virus from spreading between providers, patients, and the broader community.

The delivery of services across state lines and writing prescriptions without an in-person medical evaluation are only two of the many services made possible by this revision to the rules.

Fraud and Abuse in Telehealth

Just like any other sector in society, healthcare is full of crooks. With piles of money flowing out of Washington these days like manna from heaven, why not?  The Office of Inspector General (OIG) has noted the rise of “telehealth, telemedicine, or telemarketing services” (“telemedicine companies”) that pay off practitioners to “write prescriptions for medically unnecessary durable medical equipment (DME), genetic testing, wound care items, or prescription medications.” These telemedicine companies then submit fraudulent claims for payment. Or, believe it or not, bundles of prescriptions themselves are gathered up and sold on the black market for others who might wish to take the risk in submitting them.

You may have heard the expression “On the Internet, no one knows you are a dog.” Well, in telehealth, sometimes no one knows you are an actor instead of a real patient. Some telemedicine companies have recruited a stable of actors who pose as patients and are presented to an unknowing practitioner. This can be backed up with fake medical charts, or the encounter might be presented only as a “consult.” In any case, the result is the same: the manufacture of fraud.

Reviewing the list of HHS enforcement actions in telehealth makes exciting reading.

  • “Telemedicine company owner pleads guilty to telemedicine fraud conspiracy . . . one of 26 charged in largest fraud operation ever prosecuted in Southern District of Georgia”
  • “Telemedicine Company Owner charged in superseding indictment for $784 million health care fraud, illegal kickback and tax evasion scheme”
  • “Two Montana nurse practitioners admit telemedicine scheme to defraud Medicare of more than $18 million”
  • “Doctor pleads guilty to obstructing telemedicine investigation”
  • “Federal Jury Convicts pharmacy owner for role in $174 million telemedicine pharmacy fraud scheme”
  • “Managers of Arizona telemedicine company admit roles in $64 million nationwide kickback, health care fraud schemes”
  • “MD agreed to pay $87,000 and be excluded for eight years for receiving remuneration in exchange for ordering durable medical equipment”
  • “Patient recruiter convicted in $2.8 million telemedicine scheme against Medicare”
  • “Anesthesiologist indicted for alleged role in $7 million telemedicine health care fraud conspiracy”

If the practitioner is being paid a separate fee by the telemedicine company, the federal anti-kickback statute can be twisted into an enforcement weapon. In March of 2020, the OIG wrote that if practitioners reduced or waived some costs for patients such as coinsurance and deductibles, this “would potentially implicate the Federal Anti-kickback statute, the civil monetary penalty and exclusion laws related to kickbacks, and the civil monetary penalty law prohibition on inducements to beneficiaries.”

On its face, this statement sounds like the practitioner could get punished by the government for lowering their costs to patients, which is a bit bizarre. However, due to the COVID-19 PHE, HHS said it would “not enforce these statutes.” A number of other rules were put in place to accommodate the urgent need for telehealth.

Rule Changes for Telehealth

There is a bright side to all of this. These rule changes—actually the suspension of enforcement of some rules—have enabled the healthcare sector to make a robust transformation towards accommodating telehealth. These rules were set to expire on Oct. 13, 2022, but recently have been extended for 151 days, e.g., until March 13, 2023.

There is consideration of further extensions.

This extension is a wise decision by HHS because it is forward-looking and aims at further re-engineering and transformation of health care delivery in the United States. As such, it can be seen as merely one more step in a long line of innovations.

History of Telehealth

Public healthcare providers in the United States have been experimenting with telehealth services for more than a century, 122 years to be exact. The “Home Health Agency Manual” published in 1900 mentioned “telehomecare encounters.”

In 1924, there was a radio show about a “radio doctor.” In the 1940s, in Pennsylvania, X-Ray images were sent over the telephone line. A teleradiology system was built in Montreal in the 1950s. In the 1970s, Native Americans in Arizona saw their X-Rays, electrocardiographs, and medical records being sent over microwaves. 

After 1900, the literature on telehealth remained almost nonexistent until approximately 1990 whereupon we see the beginning of rapid growth. If we count the number of times the term “telehealth” appears in publications from 1990 until present, the mentions have increased 153 times in 28 years, for a very steep compound annual growth rate of 19 percent.

During this quarter of a century of rapid growth, telehealth has been innovative and prolific. This may be seen by the policy of HHS to divide telehealth into several categories:

  • Asynchronous Telehealth (mostly sending back and forth data, statistics, messages)
  • Synchronous Care (“real time,” video calls, audio-only calls, text messages)
  • Remote Patient Monitoring (blood pressure, pacemakers, glucose meters, oximeters)
  • mHealth (using smartphones and apps for monitoring, treatment reminders)

The Future of Telehealth

Although these innovations have proved to be very useful, they are only the beginning of a great transformation in healthcare and telehealth. This transformation is being driven by advances in information technology, telecommunications, artificial intelligence, robotics, and virtual reality.

Artificial intelligence will grow in importance. 

In every aspect of healthcare delivery, AI will compel dramatic changes. The largest effects will be felt when the demand for the current army of office workers and bureaucratic support for healthcare disappears. Although AI will be important, the most dramatic effect of information technology will be gained from integration of complex systems. These technologies will dramatically reduce the cost of healthcare.

Robotics will allow tele-surgery.

Surgery by robotics already offers many capabilities superior to human-only intervention. It already is done through telecommunications, but in the future the distance between the patient and the doctor operating the equipment will be increased with no practical geographical limit.

State and national barriers inhibiting the internationalization of surgical procedures will disappear. We will see the first transnational surgeries, as telehealth is pushed out to developing countries. Microsurgery techniques will improve, making even molecular-level work possible.

Autonomous surgical robots will be dispatched to the scenes of accidents, warfare, or extreme poverty devoid of medical resources. Robots will learn to do minor surgical and medical first aid operations without human intervention. What would be the current billing code for that?

Home and hospice care will rely on androids and pet robots.

The costly, inefficient, and staff-heavy services for the elderly and end-of-life patients will be both substantially economized and improved through the use of androids and pet robots. Androids will perform all standard less-skilled actions (clean up, dispensing of medications, help in locomotion, bed rolls, dressing, feeding, bathing, and massage).

Pet robots will provide companionship for the elderly, and those who have no family available for caring. Speech recognition and AI will provide conversational relationships and psychiatric counseling without human intervention. Avatars already are available for these services. Avatars will become life-long friends. These innovations will cause vast changes in billing and coding.

Androids and algorithms will make decisions about healthcare.

Starting with routine procedures, and meeting simple needs, androids will rapidly gain capability to make important decisions about healthcare. They will recognize emergencies and be able to call on additional resources, including live humans, as needed. They will be sensitive to changes in a patient’s condition and act accordingly. Billing for services will come to recognize the reliability of AI decisions without human intervention.

Virtual reality and virtual worlds will aid patient recovery and treatment.

Severely injured or disabled persons will be able to live important parts of their life virtually, where they exist as a healthy avatar. VR already has proven to be a major platform for education, simulation, training, collaborative work and recovery from serious burns and combat injuries. VR will be particularly important for persons who lose limbs or otherwise are severely damaged and unable to live a normal life.

Augmented reality will reduce training costs and accelerate healthcare delivery.

Augmented reality already has proven to yield superior cost/benefit results for training persons in complex work tasks. This technology will vastly magnify the potential skills of personnel without the need for costly training ahead of time. This will also make obsolete many credentialing systems and wipe out the corrosive tendency for over-specialization currently plaguing healthcare.

Billing for Medicare and insurance will no longer rely on coding or human judgment.

Authorizations for provisioning of medical services will be instant and irrevocable, with almost all decisions being made by not by humans, but by intelligent systems. Humans will be stripped of liability. The interface between doctor and machine will be of a conversational nature using normal speech. Intelligent systems will participate in doctor’s meetings as third parties. They also will serve as intelligent guides to the massive world of scientific literature. The efficiency and capabilities for collaboration between doctors will be improved by orders of magnitude, thus further improving decisions and lowering risk.

The labor-intensive and bureaucratically expensive nature of healthcare billing will be replaced by intelligent systems.

Millions of persons will become redundant. Patient records will be completely standardized and encrypted worldwide. Healthcare costs will drop dramatically, while salaries for those who remain will leap.

Most Medicare billing and claims processing will become obsolete and disappear.

The entire system for Medicare billing will be transformed into a real-time monitoring system with micropayments being made instantaneously, and liability of errors carried by the algorithm, not by health care providers.

Auditing as we know it will disappear and be replaced by intelligent systems.

The separation of humans from delivery of healthcare, and the normalization of telehealth will eliminate the need for auditing, auditing companies, auditing appeals and the entire paraphernalia of today’s broken and dysfunctional system. Humans will be removed from billing activities, and intelligent systems will ensure rapid and accurate accounting.

A medical cyber attack may kill millions.

The incredible benefits that will come from these new technologies will be balanced by increased vulnerability. It is entirely probable that international national conflict might lead to nation-state originating cyber attacks that will damage the information infrastructure of the healthcare world, leading to many deaths. This could be an accident or a deliberate attack. Cybersecurity will remain a crucial concern for the foreseeable future.

The current boost in use of telehealth should be seen as a hidden blessing of the COVID-19 PHE. It has made it easier to harvest the potential for this technology, and to broaden its application. Nevertheless, these small steps should be placed into perspective, as they are only the very beginning of a new future.

The private sector in the U.S. healthcare industry, has fostered the growth of the Medicare Advantage system. These plans have different costs and benefits for patients in comparison to standard Medicare.

In essence, advantage plans represent a giant outsourcing operation. The private sector is providing services that the government also is providing, but theoretically, in a more efficient way. This is the logic of privatization in public policy. It is designed to save the taxpayer money.

Government and Private Sector

The most recent data from the end of 2021 shows that the total enrollment for Medicare in the United States is 63,964,675 persons. But this is divided into two categories, enrollees who are part of “Original Medicare” and those part of a “Medicare Advantage” or other health plan. It almost sounds like buying a soft drink. There is the “New and Improved Advantage” flavor and the “Original.” Here, Medicare Advantage and Other health plans have an enrollment of 27,919,354 (56 percent). So, Medicare is delivered approximately half by the government and one-half by the private sector.

Structure of the Medicare Advantage Industry

There is one government, but is there more than one Advantage Plan? Yes. There are 939 separate Medicare Advantage Plans, almost one thousand of them. They vary in size. For the smallest plan, the enrollment is only 11 persons. The average enrollment among the 939 plans is 32,570 persons. However, the largest Advantage plan has an enrollment of 1,881,456 persons. This means that the largest plans are 171 thousand times larger than the smallest plan, and 58 times larger than the average Advantage plan.

This is not the complete picture. There are several holding companies that own more than one Advantage plan. The 939 separate plans are owned by 302 holding companies, most of which control only one or two plans. On the other hand, some holding companies control many separate plans.

For example, the top five holding companies – Centene, UnitedHealth, Humana, Anthem, CVS Health – together control around 33 percent of all plans.

One would suppose that the more plans that a holding company controls, the larger would be the number of its enrollees. But if we examine the top 10 largest holding companies and do a correlation analysis between the number of enrollees and number of plans held, the value is only 0.58, not a very strong correlation.

This can be seen by examining the two largest holding companies. Centene controls 108 Advantage plans and services 1,506,247 enrollees; UnitedHealth controls 79 plans yet services 8,140,542 enrollees.

Concentration in the Medicare Advantage Industry

We can make a rough estimation of the “market power” of these holding companies by measuring the number of enrollees they service. UnitedHealth is the largest, with 8,140,542 (27 percent) of all Advantage enrollees. This is followed by Humana with 17.2 percent and CVS Health with 10.7 percent.

Therefore, the top three largest Advantage plan holding companies, as measured by number of enrollees, service more than half of the entire market (55.2 percent). If we add the next two largest holding companies, Anthem and Centene, then we see that the top five largest holding companies service two-thirds (66.7 percent) of the market.

This is the level of industrial concentration. Five (or 1.7 percent) of the 302 holding companies together control two-thirds of the market.

Emerging Public Policy Questions

This level of concentration within the context of load-sharing between the government and the private sector raises a number of public policy questions.

  • Has the Medicare Advantage Industry Matured?

The lifecycle theory for firms predicts that eventually only a handful of companies will dominate the entire market. An example is the automobile industry in the United States today. This is the “maturity” phase of the lifecycle, preceded by the “introduction” and “growth” phases. The “maturity” phase is followed by “decline,” but we don’t need to worry about that, because people are going to continue to get sick forever.

The argument in favor of this arrangement is that these surviving giants are more efficient. For example, our largest player, UnitedHealth, services more than 8 million enrollees through 79 plans. It would be far-fetched to argue that it is not efficient.

  • Should 3-5 Players Dominate the Market?

The largest players dominate the market. Should they be allowed to? Should efficiency always win? If so, then it follows then that these largest and most efficient players should be allowed gradually to gobble up and acquire the hundreds of small plans, which cannot possibly be as efficient.

Is this the best outcome? Would further consolidation be better, or would there be a sacrifice of something on the altar of efficiency?

Also, efficiency leads to profits for the private sector. This could certainly raise the profits for these giants. Is that a reasonable public policy outcome? One could argue “No”, but the counterargument is that compared to the scale of Medicare operations, the actual profits are a very small price to pay for this efficiency.

  • Is the Private Sector More Efficient Than the Government?

Do we know if these private sector organizations are more efficient than the government? It is not clear if anyone knows the answer to this question. How could it be measured? The truly gargantuan CMS with its army of persons on the government payroll, enjoying the benefits and job security of government employment could be measured. But we would need to add in all the supporting organizations, such as the program integrity contractors, the auditors, the appeals system, the claims processors, and others, all of which are necessary for the government to do its job.

And not all government salaries are so low compared to the private sector. The director of the National Institutes of Health’s National Institute of Allergy and Infectious Diseases   made $417,000 in 2019, plus a large number of commissions from pharmaceutical companies. But that is probably far out of range of the average government payroll which most would assume is lower than the private sector.

If all these costs were added together, then would the government side actually be more costly?

On the other hand, if the private sector actually is less efficient, as probably many of these smaller Advantage plans are, then should they be allowed to continue as independent operators? We ask again: What do we sacrifice on the altar of efficiency?

  • Should Government and the Private Sector Have Exactly the Same Auditing Standards for Quality?

All industry observers know that across the Medicare world, both government and private sector, there are vast differences in auditing standards. It is not so much that the basic rules for providing services and what the health care provider should be paid are so varied. Instead, it is the interpretation of these rules that seems to change from one organization to the other.

For example, there are indications that providers being audited on the private sector side are not treated as well or as fairly as on the government side. Perhaps that is true, but the evidence is only anecdotal.

To really understand the situation, we would need to examine Medicare appeals cases and look at the details of why claims were rejected, and how settlements eventually were reached.

Is there a significant disparity as to provider rights and outcomes on the government compared to the private sector side? The counterargument would point out that the appeals process is more or less the same. The counter-counter argument, however, might point to differences in auditing rates, or differences in the administrative burden on the provider imposed by audits. In general, is it easier to supply health care services on the private sector side or is it more difficult? Are there more audits, or less? Are the appeal outcomes the same or different?

All these questions need further investigation.

The Future of Medicare

Above we have pointed out the astonishing division of labor between the government and the private sector in providing Medicare services to millions of Americans. We have shown that on the private sector side, the industry has reached a “mature” phase, with a very large amount of concentration where the top five holding companies are servicing two-thirds of the enrollees. We have pointed out that although there are underlying assumptions regarding differences in efficiency between the government and the private sectors, there is no definitive answer. Nevertheless, we expect that having two parallel systems of administration providing the same services to enrollees intuitively seems wasteful for the society.

Should efficiency win? Well, first, we need to truly understand where the efficiency is. Then, we will need to decide whether efficiency is the be-all and end-all of healthcare decisions and public policy.

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