Gaming Medicare

I twatted about this WSJ article on  – do we call it Medicare Fraud?  I dunno – maybe it’s just “Don’t hate the playa – hate the game?*”    You can decide…

Here’s the Journal:

“A Kindred Healthcare Inc. hospital in Houston discharged 79-year-old Ronald Beard to a nursing home after 23 days of treatment for complications of knee surgery.

The timing of his release didn’t appear to correspond with any improvement in his condition, according to family members. But it did boost how much money the hospital got.

Kindred collected $35,887.79 from the federal Medicare agency for his stay, according to a billing document, the maximum amount it could earn for treating most patients with Mr. Beard’s condition.

If he had left just one day earlier, Kindred would have received only about $20,000 under Medicare rules. If he had stayed longer than the 23 days, the hospital likely wouldn’t have received any additional Medicare money.”

The Wall Street Journal explains the problem of misaligned incentives further:

“Under Medicare rules, long-term acute-care hospitals like Kindred’s typically receive smaller payments for what is considered a short stay, until a patient hits a threshold. After that threshold, payment jumps to a lump sum meant to cover the full course of long-term treatment.

That leaves a narrow window of maximum profitability in caring for patients at the nation’s about 435 long-term hospitals, which specialize in treating people with serious conditions who require prolonged care. General hospitals are paid under different rules.”

Now again, let me make a disclaimer: I’m not a public policy expert:  I am a pragmatist who lives in the real world.   Is there any reason why the Medicare reimbursement schedule should have this screwed up step-function at Day 23 which results in charts like this one from the Journal’s research???


Instead, why don’t the reimbursements accrue in a straight line until the maximum level is met?   Alternatively, you could accrue them at a decelerating pace (as opposed to the accelerating pace of the step function).  I’m sure the counterargument is “well keeping track of these accruals will result in higher costs” – to which I say ” BULLSHIT.”   As the Journal’s research shows, this is yet another one of the plethora of ways in which Medicare payments are being gamed for profit.

Let’s get these reimbursement rules changed ASAP.


* I say this because the hospitals aren’t making the rules – they’re just taking advantage of them.  That said, it seems intuitively absurd to suggest that healthcare is an area where it’s ok for participants in the system to game it for maximum profitability, what with the Hippocratic Oath and all… I mean, if there was any doubt that things aren’t being done with the best interests of the patient in mind, there’s this WSJ quote:

“The former administrators say their corporate bosses exerted pressure to discharge as often as possible during the most lucrative days, rewarding managers who succeeded and questioning those who didn’t.”

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