The problem with central planning in health care is the same as the problem for central planning in any other area of our lives. It assumes that the planning body is able to make decisions for hundreds of millions of people and optimize the results. The justification for government provision of health care is wrapped up in morality and rhetorical turns of phrase, as it must be to get around the obvious contradictions and logical incoherence.

Discussions of health economics, even by many PhD economists, often seem to neatly and conveniently avoid any mention of the relationship of prices, supply and demand, the essentials in any economic discussion. In every respect, the provision of health care is an economic issue, similar to the provision of food, shelter, clothing, transportation, and every other need of humanity. There is absolutely nothing special about a doctor doing brain surgery. It is a service that he or she provides, and the market for brain surgery operates according to the same economic laws as the markets for plumbing, catering or transportation services.

Not all discussions of health economics avoid economic principles, however. A growing number of participants acknowledge the tradeoff in the triangle of access, affordability and quality. In a health care system, you can successfully manipulate one or maybe even two of the three, but you can’t manipulate all three at once. You can artificially make health care accessible to everyone and even control prices to make it more affordable. In that case, the quality will inevitably suffer. You can have the highest quality and make it accessible to all, but the society will go bankrupt trying to pay for it. In order to make a high quality health care system with a low overall cost to society, you must necessarily exclude people with expensive problems. The three factors are opposing. You can’t have them all together.

The iron triangle of access, affordability and quality is really just a nod to the relationship of demand, price and supply. In any market, whether for health care or automobiles, manipulation of prices, demand or supply inevitably leads to negative unintended consequences. Health care would benefit a great deal if only people would take economic law into account.

Central planning, in all of its various forms, must, by its very nature, ignore economic law. It must manipulate prices, demand or supply. There are no other tools for central planners to use. Taxes, regulations and other legislative vehicles are merely the methods they choose to impose controls on supply, demand or prices.

If one assumes that all politicians and bureaucrats are actually benevolent and really care about the needs of the citizens, one might believe that the laws and regulations they enact will be beneficial to all of the people. That belief fails on at least two points. The first, most glaring fault is that politicians and bureaucrats are generally not benevolent and don’t care for the rest of us. Their career advancement depends on accumulation of power. Their benevolence falls toward those special interests that give them the highest bang for the buck they take from taxpayers.

The second failing is vastly more important, though much more subtle. Planning by government assumes that individuals don’t plan, or more to the point, that individual’s plans are wrong and don’t count. In reality, only the plans of people count. All that government planning can do is restrict the options for consumers and entrepreneurs and distort the economic environment under which they make their decisions.

The crisis in health care has only been an issue since politicians decided they know better than consumers do. The real solution to the health care crisis is to remove the cause, the severe interference that has distorted the markets for decades. Quality health care will be affordable only when individuals are accountable for their own costs and providers are free to compete on their own terms. Everything else is political whitewash.

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Ultimately, the issue comes down to whether or not an unborn baby (i.e., a fetus) is an individual with rights. If he/she is, then abortion should be criminalized. If he/she is not, then it should be a completely unregulated procedure.

That’s the moral side of abortion. But what about the economic, or utilitarian side? The authors of Freakonomics made the case that abortion was a societal good in that it led to a drop in crime rates. But did it really? Here’s a contrary view:

Students of economics know that people make decisions based on incentives. If something costs more, then people are less likely to do it. The illegality of abortion, whether right or wrong, made the “cost” of sex higher than it is today. When abortion was illegal, women could still theoretically get an abortion if they really wanted one, but they faced criminal penalties and greater expense, not to mention the comparative difficulty of procuring the service. The nation-wide lift on America’s forty-five state abortion ban “lowered the cost” of sex for women, and for men — who had previously been expected to marry a woman should she become pregnant. Roe v. Wade specifically lowered the “cost” of unprotected sex in the pre-AIDS era, undoubtedly contributing to the explosion of STD rates.

Now when something becomes cheaper, people do more of it. Making no moral judgment on the behavior, the fact is that Roe v. Wade did lead to a a massive increase in casual sex. This put tremendous pressure on girls to have sex — after all, they could always have an abortion if they got pregnant, right? And if they decided to keep their baby — as many did — then the man in question could wash his hands of the situation: “it was her choice — she could have had an abortion!”

This Austrian analysis of “human action” is supported by statistics and is the subject of a chapter in John Lott’s Freedomnomics , an answer to Freakonomics . Out-of-wedlock birth rates soared from 5 percent pre-Roe to 16 percent in 1989. Amongst African Americans, the rate went from 35 percent to over 60 percent. And these children from single-parent homes were much more likely to engage in violent crime later on.

The idea that legalized abortion led to the births of fewer unwanted children, and that this led to a drop in crime makes intuitive sense. However, upon deeper inspection, it just isn’t true.

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The reality of in utero surgeries are so risky, however, that there is some debate regarding which ones should be attempted. The hole resulting from spina bifida can be closed through surgery, as well as the hole caused by congenital diaphragmatic hernia (CDH). With CDH, the hole is in the baby’s diaphragm. This causes a problem since the organs that are supposed to remain in the abdomen can move upwards into the chest. This displaces the lungs and often causes the baby’s death soon after birth since the lungs have little room to develop properly. Unfortunately, when surgeons began trying to correct CDH while the baby was in utero, there were several problems. For example, if the liver had moved upwards into the chest, the blood flow could easily become compromised, killing the baby². Even worse, fetal surgery of this sort which requires the mother’s abdomen to be opened raised the possibility of a premature delivery. Given these problems, movement towards a safer procedure to accomplish the same goals has become paramount.

It is hoped that with stem cell research and gene therapy, doctors may be able to decrease the risk inherent in fetal operations by combining these new therapies with less traumatic surgeries as well as increase the number of fetal diseases they are able to diagnose in utero and treat. In fact, some believe that surgeries requiring the mother’s abdomen to be opened in order to reach the baby will be completely replaced by stem cell or gene therapy within the next 20 years.

Dr. Dario Fauza, a surgery associate at the Children’s Hospital Boston, has found a way to separate the fetal stem cells from the amniotic fluid. Using these cells, doctors might be able to cause them to grow into tissue that would cover the hole. Although not currently possible, it is suspected to be achievable in the next 10 years. If this worked, it could quell the intense side effects sometimes seen from current fetal surgeries. Stem cell therapy of this kind is seen by many scientists as the future of medicine and very promising. By introducing the cells needed by the baby while in utero, it is thought diseases could be corrected before severe symptoms occurred. Furthermore, since the immune system of the baby would be weak, it would more easily accept such stem cells. Also, since the baby is still a small mass of growing and differentiating cells, introducing new stem cells at this point would allow them to integrate more fully and succeed more definitely.

Gene therapy, a second alternative to the current fetal surgery is interesting in theory however, in practice it has yet to progress as far as stem cell research has. This has been studied in mice, however, not in humans³. This type of therapy manipulates viruses to introduce a gene needed by the patient to their cells. For a developing baby, this may interfere with their development. Also, a foreign gene such as this could initiate an immune response which could be counterproductive. As such, gene therapy will most likely be used only in the most ominous of situations.

Spina bifida affects 1 in every 1,500 babies each year while CDH occurs in 1 of every 2,500. In the U.S., $230 million each year is spent due to CDH⁴. According to the Centers for Disease Control (CDC), $636,000 is spent for each baby born with spina bifida during their lifetime⁵. This is only a small fraction of the costs associated with the various diseases children can be born with. If the possibilities for stem and gene therapy come to fruition as many scientists believe they will, these costs can be reduced for both the families affected as well as the government.

1. Nature Medicine 14 (11), 1176-1177 (2008)

2. J. Pediatr. Surg. 32, 1637-1642 (1997)

3. Opin. Mol. Ther. 9, 432-438 (2007)

4. J. Pediatr. Surg. 30 (2), 226-230 (1995)

5. Spina bifida costs and facts

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First, we were told we probably had a virus since a strep test came back negative. For this we were each prescribed Tamiflu, an anti-viral, and a special gargling solution. Within two days we were back, my husband’s throat in such pain, he could barely swallow to eat. He was given pain pills (which didn’t work) and steroids to reduce inflammation. He was also prescribed Valtrex, another anti-viral medication.

Within two days, he was in the ER, asking for something to stop the pain. Another strep test was run which, again, came back negative. The nurse and physician’s assistant were rude, barely listened and useless, while the floors and general state of the ER was filthy. We were not the only ones to receive sub-standard care. The patient in the bed next to us was informed that a cab was waiting outside to take her home. “Wait,” she yelped, “what do I have? What do I need to do about it?” The nurse informed her that she had most likely had a panic attack but couldn’t tell her anything about what that meant, how to recognize the attack if it recurred or what to do about it. It was left to the security officer who was keeping the woman company to explain what a panic attack was, what they felt like and why they occur. My husband and I were appalled that this woman would be released from the hospital without anyone bothering to tell her the diagnosis or how to manage it. To add to this disgrace, my husband became infected with pink-eye in both eyes after coming home from this ER visit.

By the weekend my husband was at the Urgent Care Center coughing and sneezing blood. We were told it was most likely a sinus infection and were prescribed an antibiotic. While this has helped, we still have no idea what was actually wrong and have spent approximately $400 on doctors who have rushed through a minimal exam, have run almost no tests and have prescribed whatever medication correlates with their current theory, the majority of which has not helped us at all.

While my husband spent two weeks in pain, I spent that time deteriorating into a persistent, frequent cough that continues to make breathing difficult when a long coughing “fit” occurs. First, I was prescribed viral medication. After a week, the cough was so uncontrollable I went to the Urgent Care Center where I was told I probably had Whooping cough. I was given the test and prescribed antibiotics and cough suppressant syrup and pills. Within three days I was back to the doctor, the cough suppressants having failed. This doctor said I probably had a simple sinus infection and I was prescribed a steroid and a different cough syrup.

These stories do not recount isolated events. A family member also went to the doctor complaining of sinus problems. The doctor refused to run any tests to determine exactly what the problem was. Instead, he wanted to prescribe an antibiotic based on what he thought might be wrong. After the patient persisted, however, he finally ran a test. Of course, the doctor noted in the medical records that the test was run “at the insistence of the patient”. It was lucky that our family member knew which test to ask for since the results caused the doctor to change the antibiotic prescription. The pharmacist noted the original prescription would not have worked for the infection our friend actually had.

All of this leads to the questions: why are doctors so resistant to running tests and why do they prefer to guess at how to treat their patients? The answer seems to lie at the door of the insurance companies. Unfortunately, healthcare is a business. This means the insurance companies are constantly watching their profit margin and trying to pay out as little money as possible. The doctors end up answering to the insurance. Rather than the doctor doing what they believe is medically prudent, they guess at diagnoses in order to keep the insurance companies at bay. This is why the note “test run at insistence of the patient” was added to the files. This system allows those in insurance who have no medical training to direct doctors who are supposed to be in charge of their patient’s well-being, not the insurance company’s bottom line.

Healthcare is a big business. William McGuire, the former CEO of United Health Group, walked away with $124.8 million as compensation in 2005. After a financial scandal he was forced to return $400 million of his stock options which total $1.6 billion. The rest remains frozen. In 2005, McGuire was the third highest paid CEO on Forbes list of 500 highest paid executives. This seems more than unfair; it seems almost criminal that while many patients are driven into debt or bankruptcy, insurance executives have made off with huge paychecks. If health insurance is a business, then business is good.

Pharmaceutical CEOs are reaping profits too. Merck, responsible for Vioxx, recalled the medication when it was found to increase the risk of stroke and heart-attack. While Merck’s stock price dropped, their CEO, Ray Gilman, received a bonus. He made $37.8 million in 2004. In 2007, many top CEOs took a 15% pay cut. This was, however, only after their average pay raise of 38% in 2006. Even after this pay cut, the top 500 executives still had a combined profit of $6.4 billion, or $12.8 million each. As for the new CEO of United Health Group, Stephan Hemsley, he ranked 346 out of the 500 top paid CEOs on Forbes 2008 list. This means in 2007 he was paid $4 million.

In 2007, $2.3 trillion passed from patient’s pockets to the healthcare industry. This was 16% of the gross domestic product and 4.3 times what is spent on national defense. Insurance premiums for plans offered by employers rose 6.1% and for small businesses with 24 employees or less, premiums rose 6.8%. To meet the insurance premiums, employees spent 10% more in 2007 than they did in 2006. Since 2000, premiums have risen 100% while wages have only grown by 21%. In 2005, a Harvard University study found that of those filing for bankruptcy, 50% were doing so due to medical bills.

It is unlikely the government would run the healthcare system any more competently, efficiently or inexpensively (look at social security, welfare and the government set-up Fannie Mae and Freddie Mac). However, it seems something needs to be done. While people should have insurance and should not foist their bills onto other tax payers, they should not be taken advantage of. Nor should their diagnosis be guessed at by doctors more concerned with saving time and money to appease the insurance conglomerates than their patients. There must be a better way other than allowing the insurance business to hold patients hostage within a system that has basically formed a monopoly. Either insurance is obtained through the large insurance companies or your family remains uninsured. There are no other options available.

With the type of Mafioso-style stranglehold insurance companies hold over doctors, one must wonder if insurance-for-all, with insurance in its current form, is the solution that many seem to regard it as. Rather, it must be asked if giving insurance companies more power over decisions that only doctors are qualified to make will truly garner the best outcome for the patient. Perhaps we should consider reforming our insurance system and doctors rather than expanding insurance’s reach to every American.

References:

1. Providence Journal

2. McGuire Appeals Freeze on Stock Options

2. Forbes 500 List 2005

3. Top Paid CEOs 2008

4. Forbes 2008 Top CEO Rankings

5. Poisal, J.A., et al, Health Spending Projections Through 2016: Modest Changes Obscure Part D’s Impact. Health Affairs (21 February 2007): W242-253.

6. California Health Care Foundation. Health Care Costs 101 — 2005. 02 March 2005.

7. The Henry J. Kaiser Family Foundation. Employee Health Benefits: 2007 Annual Survey. 11 September 2006.

8. Himmelstein, D, E. Warren, D. Thorne, and S. Woolhander, “Illness and Injury as Contributors to Bankruptcy”, Health Affairs Web Exclusive W5-63, 02 February , 2005.

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The vaccine was approved by the Food and Drug Administration in 2006 and was met with a lot of fanfare and a recommendation by the Centers for Disease Control to routinely give it to young girls. Thus about 16 million doses of it have been given since its approval.

But in the last year or so, there has been a backlash against the vaccine. This is largely due to the fact that mandatory vaccination is being put on the ballots in several states. These efforts have been supported by its manufacturer, Merck. This corporate push, in combination with a general anti-vaccine movement, have stirred the controversy around the vaccine, which goes by the trade name “Gardasil”.

Thus far, there do not appear to be any major side effects from the vaccine other than some patients had allergic reactions and some fainted after taking the vaccine.  Many parents have been hesitant to give the vaccine to their young daughters who are not yet sexually active.

In general I do not think anything should be mandatory in medicine with a few exceptions. The main exception is the situation where failure to mandate intervention will threaten the greater health of the community. This is a concept called community beneficence. The best analogy is that of a disease such as smallpox in which transmissibility is an issue and vaccination is the only way to protect people. In that situation failure to vaccinate will lead to the spread throughout the entire population. Given that HPV is a sexually transmitted virus, I do not think a mandate is necessary. Those who want the vaccine can take it. It should not be forced on anyone.

One thing that people do not understand is that vaccine creation is an expensive and corporate driven endeavor. It costs tens of millions of dollars and at least a decade of research and experiments as well as a very strong lobby to create a vaccine. In the history of vaccines, vaccines have only been created because their was a large public health demand and threat or because there was a select population or lobby that pushed the vaccine’s creation.

One example of the latter is the Lyme Disease vaccine - a totally useless vaccine for anybody that lives outside of Connecticut or the woodsy Northeast, but one that nevertheless was created and targeted for those wealthy populations that wanted it. Undoubtedly it was a profitable endeavor for its creator. Undoubtedly it did not really do much good for 99.9% of the population.

The HPV vaccine isn’t as ridiculous as the Lyme Disease vaccine. HPV is associated with cervical cancer transformation, and cervical cancer is a big cause of morbidity and mortality among women. However, it’s difficult to say that the mandate is not profit driven by Merck or that the lobby for this product is not lining the pockets of legislators who are mandating its use.

Thus far the mandate has only been passed in Washington, D.C., and Virginia with HPV vaccination being a requirement for school attendance. However it is being considered in almost every other state.

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One problem with Medicare Part D is that it is difficult for patients to organize their medications, shop for different medications, and coordinate their overall drug benefits. I happened to find a relatively new company called Destination Rx that is trying to make managing the prescription drug benefit much easier for patients. I do not have a financial interest in the company nor do I use the company. But in the spirit of investigating this topic, I thought it may be worthwhile to point out some of the newer companies out there that may be of benefit to readers. It is interesting also to see how technology can empower the patient.

This is a company that essentially allows the patient to create an account and manage their prescriptions drugs. It is a free site that provides online shopping comparison for prescription drugs. If you are not yet enrolled in Medicare Part D their site allows you to do so. If you already take medication you can find out if there are lower cost drugs such as generic brands as well as mail-order and retail pharmacy prices. They have created what they call a “Medicine Cabinet” to allow you to manage your prescriptions. You can even look up medical conditions and find out what treatments are available so you can initiate a discussion with your physician about treatments.

Although I am sure that many sites and services like this will appear, it seems to me to be a great idea. I’m not sure how much traction it has had or whether enough Medicare-age patients are savvy enough to use the internet or have the resources to access the internet for this kind of service. However, what I like about this type of service is the tremendous cost savings that it might bring Medicare recipients. If retailers and pharmacy resellers are forced to lower prices do to competition and increased efficiency in drug selection, healthcare costs can decline.

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When I was a resident we had an attending on rounds who always would ask us if we knew what the costs were of every drug or treatment that we ordered. Most of the time we did not know. We ordered what was commonly ordered. We did not typically try to find out the cheapest alternative. Occasionally we would have a patient who insisted to know the cost of every medication they were receiving and all of the cheaper alternatives.  Wouldn’t it be great if we could provide a menu of treatment options and their costs to every patient and allow them to direct their care?

There have been many times in my career where I felt that was the case. However, being in the hospital and seeing a menu of medications and their costs is not like going out to dinner and choosing off of a menu. Even though we describe the patient as the “consumer,” they really are not the consumer. They are the patient. They must consent to treatment and can choose treatment options, but they cannot “direct” their own care. If they could direct their own care then doctors would not be needed. As I’ve mentioned previously doctors are licensed to practice medicine and usually are board certified in their specialty. They have been trained for at least a decade to become licensed. Thus they direct patient care. Patients can choose treatments, but doctors ultimately are responsible for what happens to the patient.

In many ways, a doctor is a parent and a patient is the teenager. The teenager is almost a fully functioning adult, able to make their own decisions, but they are not old enough to be independent from the parent. A good parent makes decisions with consultation from the teenager. And ultimately the parent is responsible if anything bad happens to the teenager. There are many adult concepts a teenager cannot understand without extensive explanation. Even after such explanation they still may not understand. Thus it is not feasible to explain the pros/cons of every treatment or medication, the potential side effects, sequelae, the recent literature on outcomes, and the whole volume of information out there on every treatment and drug. Doing so would be unacceptable, and, even if you did do this, the patient may still not understand everything.

While a menu of treatment options and their costs may sound attractive in theory, it simply is not feasible and would clearly highlight that the patient is a patient and not a consumer.

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One example of this is the cyberchondriac who comes in demanding the latest medicine or implant that they have seen on television. You explain to the patient that you feel that the generic medicine is just as good and is cheaper and that you are most comfortable with prescribing it because you are familiar with its side effects. However, they have seen the commercials and they have heard of the snazzy brand name. Additionally, they do not mind paying the exorbitant price of the brand name.

It is not unusual to also have the healthy young asymptomatic patient who would like a routine work up of all of his labs. My feeling is that if you are young and have no symptoms you should have the most inexpensive tests done, if any tests at all. If they are normal then you shouldn’t have anything done for a while. These patients are the kind of patients that want to stay on top of their healthcare and come in for unnecessary tests.

Sometimes there is a patient with knee pain without a history of trauma. The patient wants an MRI when there is ample evidence that the majority of knee pain resolves within six to eight weeks of conservative therapy including icing, NSAIDS, and activity modification. The MRI costs about a thousand dollars, but the patient doesn’t care because his insurance pays for it. Thus he insists to have one and if one is ordered there is a reasonable chance that it might show an equivocal signal in the mensicus. Then an expensive Orthopedic referral is made. If the surgeon is unscrupulous or if the patient insists on having surgery, an arthroscopic procedure is done. And the chain of expensive events goes on and on in this manner, costing the health system a lot of money for an issue that probably would have resolved on its own.

The underlying theme driving the demand of healthcare by the patient is a sense of entitlement. We in the United States don’t understand that if you travel halfway across the globe there are thousands of people dying everyday of disease caused from lack of basic sanitation. But when we have an annoying pimple or wrinkle on our forehead we want to pay several hundred dollars to have it zapped. When we have pain we want and expect our healthcare system to fix us. If we are not fixed then we blame the doctor and the system.

In the end, the most expensive thing is human resources. If we as patients make people work to improve our health it is going to cost money. That cost is worth it when the situation is dire. When it isn’t, the cost is wasteful. As a patient and consumer it is important to understand this concept–making the healthcare system work for you costs everybody a lot of money and makes the system more expensive. We are all intertwined in this manner, whether we want to believe it or not.

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In a capitalist healthcare system focused on profits, what is the most effective reimbursement structure to reward providers for care while also managing costs?

We need a regulated system – a private/public partnership [that…involves payment to the government for healthcare and government-monitored, private health insurance companies administering payment to privately employed doctors and privately run hospitals]. Over the last 20 years, we have been depending on the free enterprise system to bring costs down. Over that time, healthcare costs have risen faster than the rate of inflation. That is because we don’t really have a free enterprise system. The free market is skewed by politics. The large healthcare companies have huge amounts of money to pass along to Congress via lobbyists, who influence Congress to pass laws that benefit big business healthcare.

What we are not cognizant of is the tremendous amount of profit realized by these companies, healthcare insurance, managed care, and pharmaceutical companies. These companies drive up our healthcare costs. We have the most expensive healthcare in the world, spending 17% of our GDP. France, Italy, Germany, Japan, and Taiwan spend roughly 8-9% of their GDP on healthcare, cover everyone, and have extremely happy patients.

We are told that the only alternative to the system that we have is the Canadian style system. That is a false story put out by the beneficiaries of our current system, primarily the insurance companies.

One obvious consequence of bringing down big pharma and device companies is that they will no longer spend the huge R&D on blockbuster drugs if there is no capital reward via reimbursement. Thus one clear consequence of making healthcare more affordable is a slowing of discovery and advancement. How can we incentivize advancement in medicine while controlling costs?

Big pharma spends 10-15% of its profit on research and development and 30-40% on marketing. Professor Karl Lauterbach of Germany said in a PBS interview on Frontline, titled Sick Around the World, “I don’t know of a single economist who would buy into that argument. I think this is a lobbyist argument. A market works best if there are no inefficiencies, and higher-than-necessary prices are inefficiencies. And the drug companies now spend more for marketing the drugs than for innovating the drugs. This clearly is an artifact which comes across with this system of subsidized and too-high prices.”

Do you think that class-action lawsuits by providers against insurance companies are a good solution to balance the inequity of power insurance companies wield in the current healthcare climate? Or does this merely clog the judicial system and become a distraction from what providers should be doing: helping patients?

Class actions and lawsuits in general are very wasteful of resources because the outcome is extremely uncertain and the suits are very costly in time and money. They would take time away from healthcare and possibly put health care workers in an unfavorable light vis-à-vis the public. As I said, the outcome of lawsuits is uncertain, and I think they should be used as a last resort. The better approach in this case is to influence the public and Congress for the development of a new healthcare system: a public/private partnership which eliminates the excessive profits of health insurance companies, big pharma, and managed care.

In your August newsletter, you describe the many and varied problems the U.S. has had with contaminated or improperly supervised drugs coming from China. Would it not solve a lot of the U.S.’s problems as well as poor patient outcomes if we simply stopped accepting drugs from China and instead paid a bit more for drugs that are properly supervised in countries that care to ensure it? What do you think it would take to reduce consumerism from China, especially given that drugs are not the only problems we have had, but also melanin contaminated products and lead contaminated toys?

I don’t think it likely that world trade is going to be turned back, and it may not even be a good idea. We already pay two to three times more for pharmaceuticals than other developed countries, for example Canada. We have been told that we must pay more in order to safeguard our drug supply and promote the development of new drugs.

U.S. drug companies are making record profits but still want to make more. They are having their drugs made in China to increase profits. Because we pay a premium for pharmaceuticals, I believe that we are a target for counterfeit pharmaceuticals, not more protected. Counterfeiters have no compunction about who they kill and want to make the most money. In my book, The Price of Death, I discuss the point of view of the Chinese on counterfeiting. Because this administration has actually reduced funding for the FDA despite the fact that world trade has increased, we are at great risk. At its current rate, the FDA will be able to inspect the 700 plants now open in China in the next 40-50 years. What we should do is require importers to pay a government fee to have their imports inspected. There is no reason that they should be making record profits and putting the consumer at risk as they are.

There was a problem with Baxter International heparin earlier this year, which, according to the FDA, probably came from China. The FDA says that the manufacturer used oversulfated chondroitin sulfate (OCS) instead of chondroitin sulfate (CS). The relative cost of the bogus chemical was only $9 per unit vs. $900 for the correct ingredient. There had also been a reduction in the availability of other materials to make heparin because it comes from pigs, and there was a pig epidemic in China. While it is difficult to prove, one can speculate why the plants would have substituted the new ingredient when stocks of other ingredients fell short and became more expensive. I say that it is difficult to prove partly because the Chinese government had not admitted that the OCS was the cause of the problem even though the FDA has indicated so on its website. The bogus chemical fooled the standard tests [about the protein content of the product], impeding immediate discovery of the problem.

Now Here’s Your Chance to Ask the Questions (and Win One of Three Copies of The Price of Death, Too!)

Do you have a question that we didn’t ask? Here’s your chance to pick S.J. Robinson’s brain. Submit your questions for her in the comments section, and she’ll be available for a week to answer them. Also, by submitting your question, you will be automatically entered into a drawing next week in which three winners will receive a free copy of her book. (Sorry, you must be a U.S. or Canada resident to participate in the drawing.) Please see our Book Giveaways information page for complete details and ask away!

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As I mentioned in a previous post, bundling is when insurance companies downcode or combine multiple codes into one in order to reimburse the provider less.  In this physician’s case, the insurance company was bundling endoscopies with office visits and was reimbursing for the least costly services only.  Additionally, the insurer downcoded several codes based on software it uses and tried to say that the lowered reimbursement was a “negotiated write-off” as though the physician’s practice had agreed to it. This is exactly the type of thing I was referring to when I said that insurance companies “force” physician’s to accept lower payment. As this insurance company’s logic shows, failure to fight downcoding and bundling is equal to “acceptance” by the physician. Thus, if you do not correct it, it is assumed that you accept it.

Interestingly, the practice in question has a threshold for when to trigger legal action. When denials reach over $50,000 by one insurer, it triggers the next step in legal action.

Details are not given as to who actually pays for all of these legal costs. However, you can be sure that the addition of an attorney to your practice is probably prohibitively expensive. But when the potential windfall is large - this practice says that several hundred thousand dollars are collected each year via denial appeals - it may well be worth the investment.

If any reader out there knows of any stories like this, I would be interested to hear about them. It is not often that you find a provider willing to sue an insurer over downcoding. But I anticipate to see this gain popularity in the future.

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1. Health Insurance Companies Take Advantage of Doctors, Part III
2. Health Insurance Companies Take Advantage of Doctors, Part IV
3. Health Insurance Companies Take Advantage of Doctors, Part II