Bush Administration Trying to Outsource Medicare Reimbursement Decisions to 3M

Posted on July 17, 2006

President Bush is continuing his plan to destroy the American healthcare system with his newest project: essentially he is outsourcing the entire Medicare program to 3M company. The Bush administration awarded a no-bid contract to 3M to force hospitals across the U.S. to use the proprietary 3M software to cut Medicare payments to hospitals and doctors for common services by up to 30%. Yet, the administration admits this ill-conceived plan is not a cost-cutting measure. The shocking plan to cut payment for services such as cardiac care, arterial stents, and clot-busting drugs for stroke patients has infuriated members of congress from both sides of the aisle.

The changes, the biggest since the current payment system was adopted in 1983, are meant to improve the accuracy of payment rates. But doctors, hospitals and patient groups say the effects could be devastating. Federal officials said that biases and distortions in the current system had created financial incentives for hospitals to treat certain patients, on whom they could make money, and to avoid others, who were less profitable.
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Medicare pays more than $125 billion a year to nearly 5,000 hospitals. The new plan is not expected to save money, but will shift around billions of dollars, creating clear winners and losers. The effects will ripple through the health care system because many private insurers and state Medicaid programs follow Medicare�s example. Dr. Alan D. Guerci, president of St. Francis Hospital in Roslyn, N.Y., said the new formula would cut Medicare payments to his hospital by $21 million, or 12 percent. "It will significantly reduce payments for cardiac care and will force many hospitals to reduce the number of cardiac procedures they perform," Dr. Guerci said.
A coalition of patient organizations, including the Parkinson�s Action Network and the Society for Women�s Health Research, told the government in a letter that the new system "could have a devastating impact on payment for critical treatments for seriously ill patients, with reimbursement for some essential procedures cut as much as 30 percent." The basic payment for surgery to open clogged arteries, by inserting a drug-coated wire mesh stent, would be cut by 33 percent, to $7,590. The payment for implanting a defibrillator, like the one used by Vice President Dick Cheney, would be cut 23 percent, to $22,000, while the payment for hip and knee replacements would be reduced 10 percent, to $14,500.
"This is a bit of a catastrophe," said Dr. Herbert Pardes, president of NewYork-Presbyterian Hospital. In its zeal to cut the profits of doctor-owned specialty hospitals, including cardiac hospitals, Dr. Pardes said, the government has inadvertently hit many nonprofit academic medical centers.
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Without a delay, Mr. Slotnik said, hospitals can expect to see a 35 percent reduction in Medicare payments for stroke patients treated with clot-busting drugs. The basic payment for such cases is now $11,578. It is no surprise that the Greater New York Hospital Association, which represents many teaching hospitals in a high-cost area, objects to the new system. But hospitals in North Dakota are also concerned. Arnold R. Thomas, president of the North Dakota Healthcare Association, said the new system would cause "radical shifts" of money among the state�s 52 hospitals. "The effects would be rather random and inequitable," Mr. Arnold said. When hospitals lose Medicare revenue, they often seek higher reimbursement from private insurers. J. Brian Munroe, vice president of WellPoint, one of the largest private plans, said he feared that the Medicare changes "will introduce a significant amount of disruption to the commercial health insurance marketplace, driving up health care costs and causing marketplace confusion."

3M's rivals are furious that the contract to completely change how Medicare is billed was done on a secretive, no-bid basis. Hospitals are furious because they will be forced to buy expensive, unnecessary software then hire 3M consultants to teach them how to use it. Patient advocates are angry because now grandma isn't going to be able to get that hip or knee replacement and granddad isn't going to be able to get that life-saving stent to prevent a massive coronary -- unless he can afford to pay the difference in the treatment cost himself.

This is just another under the table, no-bid contract just like those continually awarded to Halliburton in connection with the Iraq War. Halliburton isn't the only company qualified to provide meals to soldiers in the United Arab Emirates or Iraq -- but it's the only company who has its ex-CEO picking up a cushy retirement check while he's Vice President of the United States. So, what's the 3M connection? It certainly bears investigating.