The 7/18 Boston Globe had an Op-Ed article "Medicare ‘cost-savings’ rules pushing costs onto patients". It's written by Robert Kuttner (author of "Debtors’ Prison: The Politics of Austerity Versus Possibility").
Kuttner's 99-year-old mother took a bad fall - "her face was so badly swollen and bruised that she was unrecognizable and in severe pain". She was at the hospital for 4 days in an inpatient unit. However, she later found out she "was classified as being there 'for observation' — meaning that she was considered an outpatient for billing purposes".
That's because outpatient Medicare recipients have to pay 20% - and that's a lot for a hospital stay. It also means Medicare won't cover any follow-up at a rehab facility.
Medicare does this through outside, for-profit vendors known as “recovery audit contractors,” who are paid based on how much they save Medicare. They achieve savings by punishing hospitals after the fact if a patient who might have been booked as an outpatient is classified by the admitting doctor as an inpatient. The contractor only gets paid when it overturns a medical decision — which sure seems like a gross conflict of interest.
So if the emergency room doctors make the medical judgment that a patient needs to be admitted, and the audit later concludes that the condition turned out to be not serious enough and the patient should have been considered an outpatient, the hospital not only doesn’t paid at the inpatient rate, it doesn’t get reimbursed at all.
The hospital can appeal, but appeals are often more expensive than just eating the cost. They typically take three or four years before they get to an administrative law judge.
[The article notes that in response to a lawsuit, Medicare modified the policy, now allowing hospitals to resubmit bills to Medicare
if they change rejected items to a less expensive service.]
There are other ways Medicare could save money if big business didn't have so much influence:
The privatized Medicare drug benefit, enacted in 2003, explicitly prohibits Medicare from negotiating bulk discounts with pharmaceutical companies. Medicare Part C allows commercial HMOs to target healthy seniors and reap big profits. These two gifts to big commercial players cost Medicare hundreds of billions of dollars.
The insistence that Medicare depend on private vendors costs the system billions in other ways. A few years ago, CBS 60 Minutes had a
segment on fraudulent medical supply distributors. Phantom medical supply companies were stealing tens of billions from Medicare each year by submitting bills for medical supplies they claimed to have provided to Medicare patients. It was tricky for Medicare to catch all of these crooks and ensure that patients got their supplies in a timely manner. If Social Security were to create its own medical supply distribution network, it could eliminate both the billions in fraud, plus simply eliminate the middle man.
As wealth inequality has increased, the wealthy have had growing mountains of money to invest. This has pushed them to look for new areas where investment was not previously an option. That has led to the push for privatization. It's a snowball effect - the poorer they make us the more money they will have to find ways to make us poorer. We need to draw the line.
A Scientific American article begins with the following summery:
Despite spending half what the U.S. does on health care, Canada doesn't appear to be any worse at looking after the health of its citizens
Canadians "were 5 percent less likely than Americans to die in the course of treatment."
per capita spending on health care is 89 percent higher in the U.S. than in Canada. ...one study by Woolhandler published in The New England Journal of Medicine in 2003 found that 31 percent of spending on health care in the U.S. went to administrative costs, whereas Canada spent only 17 percent
That's incredibly significant. First, because Canada's population is only a fraction of the US population, all other things being equal, Canada's administrative costs would have been more than the US. Canada saves money because of its single payer system. Second, that shows how wrong claims are that say a publicly-run system must be expensive as a result of bureaucracy.
Wikipedia notes, "The United States spends much more money on health care than Canada, on both a per-capita basis and as a percentage of GDP."
If Americans want to reduce spending on health care, they need to move to a publicly-run single payer system, not further privatization.