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Credit Cards and Medicare Savings

I live in New York. Last week my daughter in Chicago called to say that a five dollar charge had been refused at a local coffee shop. My credit card company had identified an unusual pattern of purchases, and had put a hold on the card.

No similar process exists for the Medicare system, where cost savings could be realized by systems that identify unusual patterns of charges and outright abuse by providers of medical services and equipment. A single basic change in the way the system operates has the potential to both save money and improve the care of patients.

When a Medicare patient has a service provided, the service is billed after it is done. A physician, for example, may bill a charge to Medicare one hour, one month, or one year after it is performed. There is no approval at the time of the charge, as there is with the credit card. Take the example of a 70 year old woman who sees her primary physician in New York for a regular visit. As part of his/her preventive practice, an ultrasound of the carotid arteries may be performed to assess her risk for stroke (no comment on whether this represents appropriate practice). The result is normal. Several months later, spending the winter in Florida, she sees a physician for monitoring of her blood pressure. Another Doppler study is performed. Who will get paid for performing the Doppler study, the first or second physician, or both? Well, it may depend on who bills the charge first, and several other factors.

A Credit Card for Medicare

If the Medicare card were like a credit card, the service would need to be approved before the charge was billed. And sophisticated software, such as the fraud detection systems used by credit card processors, could be utilized to identify duplication of services and potential patterns of fraud.  Both ethical and political opposition to such a change would be significant.

Changing the system to have Medicare charges approved before the service means sometimes saying ‘NO’ to a patient that is already at their doctor. Any hint of curtailing Medicare benefits has led to violent reactions (‘death panels’) by the opponents of such change. And the public may be justifiably fearful of choices made by committees or bureaucrats who have no knowledge of Medicine. Is there any way to make this work?

Doctors Need to Step Forward

Physicians know their business. Professionals in every medical field and specialty are aware of what their colleagues are doing, and where savings can be achieved without harm to patients. Patterns of abuse by sellers of durable medical equipment (wheelchairs) are recognized. But there has never been any reasonable incentive for physicians to lower costs. Doctors, after all, are paid for the services they perform.  And the legal environment makes it dangerous at times to withhold services.

Medical societies in each specialty should create groups to analyze practice patterns, and suggest ways to identify potential savings. A percentage of the cost savings must then be returned to establish and increase reimbursement to physicians for direct contact with patients. This would include an increase in payment for office and hospital visits, and payment for telephone communications and emails. This would be a win-win for patients, physicians, and the society.

A credit card company such as MasterCard or American Express could easily handle the processing of Medicare charges. Card reading devices are standardized and ubiquitous, and they have experience with sophisticated fraud detection systems.

It is time for creative ideas that originate from the providers of healthcare, and not from government or insurers. The real partners in the healthcare system are patients and providers. They need to work together to improve systems of care.

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  1. Susan Goldberg
    October 5, 2010 at 8:59 pm

    I applaud your creativity! Thanks for sharing your thoughts on this innovative approach to repairing a system that has long been broken.

  2. HannahB
    October 12, 2010 at 5:00 pm

    Dr. Rudolph, I was just moaning about this to Susan G. this morning..
    I feel so disenchanted with the upcoming VBP and performance measures to cull money from short shrifted hospitals while blatantly understaffing fraud investigators, and other staff to address the delay in resolving this issue – if we can be focusing our attention on prevention, we would save lots of money. Instead, or simultaneously, we need to keep firing staff and cutting budgets to keep Medicare afloat. While all this is going on, we have a strong push for patient centered care, patient safety. To accomplish this with fewer and fewer resources is becoming more of a challenge. This is a crime and I hope the public becomes more aware of the conflicting layers of reality. What we need is Quality Improvement staff within the government to create more efficient workflows, help prioritize risk/ benefit, and have action plans with transparent timelines for the public to understand the challenges and interventions so that they can be critiqued and evaluated for success.

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