Press "Enter" to skip to content

Health Care Capitalism Drives Unneeded Procedures, Medicare Advantage Overbilling

Hey, ever notice how capitalism and cannibalism sound an awful lot alike?

On the rare, unfortunate occasions when I must deal with doctors, I am relieved to have access to their expertise and insurance to pay for it. But that doesn't change the fact that the health care industry is filled with capitalist dogs. Two examples:

Jonathan Ellis follows up on his coverage of surgeon Allen Sossan's alleged malpractice with a report on a new lawsuit by Michelle Weidner-Jordan, the former head of physician-owned Lewis and Clark Specialty Hospital, where Sossan was a doctor and owner. According to her lawsuit, Sossan harassed and threatened fellow employees but was immune to discipline because he was bringing big profits by performing unnecessary medical procedures. When he was finally booted in March 2012, profits dropped. Weidner-Jordan says the hospital board blamed her for the losses and told her resign or be fired last summer.

It sounds as if Lewis and Clark was more worried about turning a profit than practicing good medicine and good management, But in the topsy-turvy ethics of the Hypocritic Oath, Sioux Falls doctor and conservative R. Blake Curd says profit motive couldn't motivate doctors to do such things:

But Sioux Falls surgeon Blake Curd, president-elect of the Physician Hospitals of America, an advocacy group for doctor-owned hospitals, disputes that it’s a conflict. Curd said the facility fees are spread out among a pool of doctors that typically own small shares in the hospital, so there’s not an incentive to admit patients for procedures that aren’t needed.

“The reimbursement on the surgical fee is several times what the reimbursement would be on the facility fee,” he said [Jonathan Ellis, "A Lawsuit Is Shining Fresh Light on Specialty Hospitals," that Sioux Falls paper, 2014.06.08].

Since the surgical fee is the real meat, there's no motivation for doctors to reach for the gravy of the facility fee. Right, R. Blake.

The profit motive in medicine also appears to be driving exploitation of Medicare Advantage, costing taxpayers billions of dollars. Under Medicare Advantage, Medicare contracts with private insurers to provide coverage that can offer more services and lower out-of-pocket costs than original Medicare.

However, Medicare Advantage uses a "risk score" to reimburse its health plans: the sicker the patient, the higher the reimbursement for a a given procedure.

The Center for Public Integrity finds that insurers appear to be inflating those risk scores to inflate their reimbursements, with such inflation notably prominent in South Dakota:

Risk score errors triggered nearly $70 billion in “improper” payments to Medicare Advantage plans from 2008 through 2013 — mostly overbillings, according to government estimates. Federal officials refused to identify health plans suspected of overcharging Medicare, citing agency policy that keeps many business records confidential. The Center is suing to make these records public.

Risk scores of Medicare Advantage patients rose sharply in plans in at least 1,000 counties nationwide between 2007 and 2011, boosting taxpayer costs by more than $36 billion over estimated costs for caring for patients in standard Medicare.

In more than 200 of these counties, the cost of some Medicare Advantage plans was at least 25 percent higher than the cost of providing standard Medicare coverage. The wide swing in costs was most evident in five states: South Dakota, New Mexico, Colorado, Texas and Arkansas [Fred Schulte, "Why Medicare Advantage Costs Taxpayers Billions More Than It Should," Center for Public Integrity, 2014.06.04].

The Center for Public Integrity says the Medicare Advantage error rate has averaged 12% over the past six years. Last year it dropped to 9%, or $11.8 billion. $9.3 billion of that was overcharges. Meanwhile the SNAP/Food Stamps error rate in 2012 was 3.42%, or about $2.5 billion. But since hungry people can't afford lobbyists and media campaigns, Senator John Thune squawks about waste and abuse plaguing Food Stamps while opposing cuts to root out waste in Medicare Advantage (cuts on which the Obama Administration bailed in April).

Doctors and insurers have to eat. But we can all recognize the difference between healthy eating and cannibalism.


  1. Tim 2014.06.08

    This is the same Medicare Advantage Rounds claimed the ACA was cutting to scare the hell out of seniors so he could collect their votes? The reason republicans want to save it is becoming clear now, just another way they can bilk the fed out of money and blame somebody else. Personally, I try to avoid doctors, at my age they keep wanting to cram things in all the wrong places.

  2. Barry Smith 2014.06.08

    Human nature 101-- Wherever there is a profit to be made, there is a profit to be sought.

  3. Jerry 2014.06.08

    Follow the Medicare Advantage money and you can see where it ends up politically, right in the pockets of the trolls that will keep the status quo. From the time Republicans rammed this crap through along with the unfunded Medicare Part D, you could smell the gift to big pharma, the insurance industry and the medical profession. No one in the media wants to rock the boat though and ask professional politicos like Rounds there position on the Medicare Advantage and why they support it so rabidly. It is there money ball.

  4. grudznick 2014.06.08

    Overpaid meat magicians.

  5. Lora Hubbel 2014.06.08

    Doctors were overpaid....according to who? Doctors do not set their own fees... The insurance company (specifically the managed care groups like Avera and Sanford set the law now...per Senate bill 38 2011). When this public private partnership of avaristic companies and government get together they form fascist capitalism (some call it corporatism). This is Obamacare....this is total control of your life. Doctors are a fined and threatened if they give you a procedure that works ( but is cheap) because now the parasites in the system will not get their $5000 each bonus. Do not blame the doctors....blame Sanford and Avera. When doctors did not have to kiss the ring of Managed Care, and feed all the parasites in the system, healthcare was affordable. Obama care is Managed care on steroids.

  6. Jerry 2014.06.08

    Be cool Lora, your blood pressure is going to go up. Doctors are part of healthcare systems are they not? They submit a bill and the bill must be paid, correct? Tell us how Obamacare is managed care, please. There is no such thing as what you are speaking of. Obamacare is simply a subsidy, nothing more, nothing less and only if you qualify. There is no difference between a Dakotacare policy through that what you purchase from any appointed Dakotacare agent. The same goes for Sanford and Avera.

    By the way, what we are speaking of is called Medicare Advantage, much different than traditional Medicare supplements. Medicare Advantage is actually a program for folks that are 65 and over or have Medicare and are under 65. The ACA or Obamacare is for folks under 65 period.

  7. grudznick 2014.06.08

    Ms. Hubbel, you seem insaner than most. They are overpaid meat magicians.
    Sleep on your back tonight as you dream about Mr. Wieland being a senator. I'm sure he will make you his health secretary.

  8. WR Old Guy 2014.06.08

    The MEDICARE Advantage sales agents also managed to screw veterans who are required to make co-pays for their care through the VA Healthcare system. The VA cannot bill MEDICARE or MEDICARE Advantage for the co-pays by law. Vets with traditional MEDICARE and a MEDICARE supplement normally had the co-pay paid by the supplement. They soon found out that they now had to pay the co-pays out of pocket despite verbal assurances by the salesperson that the MEDICARE Advantage plan would pay.

    Vets required to make co-pays would pay $15.00 for a primary care visit and $50.00 for a specialty clinic per visit. Physical therapy several times a week at $50.00 per session adds up quickly. Medication co-pays are $8.00 per prescription for a 30 day supply with no donut hole. Needless to say, I had a number of upset vets when they found that they were stuck paying the co-pays out of pocket until the next open enrollment so they could switch back to traditional MEDICARE.

  9. JeniW 2014.06.08

    Ms. Hubbel, I remember when doctors were not a part of a system like Sanford, and Avera, I am sure you remember that as well. The majority of doctors had their private practices, or they had a partnership with one or two other doctors, and had "hospital privileges." Would you please explain what happened that the doctors made the decision to join health systems?

    There are still a few doctors that have private practices, even in SD. Are their rates less expensive than the doctors who are in the Avera or Sanford system?

    Since you seem to be blaming Avera and Sanford, were they the ones who told people who have pre-existing condition, "don't come to us."? Or did Sanford and Avera tell the people who had cancer, or some other type of serious/chronic conditions, that they were no longer wanted? It was the insurance companies who did that.

    Have you seen what medical equipment companies charge for supplies? $1,000.00+ for a tiny stint. Sanford and Avera do not manufacture stints, knee replacement parts, hip replacement parts, IV solutions, medications, and etc., so they have to be purchased from a supplier. Suppliers do not give away supplies for free, they too are in business to gain a profit.

    Still waiting for an answer as to why the legislature (federal and state level,) failed to address the health care issues that existed long before Obama became president and the ACA concept was developed.

  10. Jerry 2014.06.08

    Another example of why this Medicare Advantage is not an advantage at all WR Old Guy. It is a shame that the people who sell this do not know the limitations of what they are selling. I do know that with the Obamacare, that donut hole is shrinking and will be eliminated in the next year or so. That will be a great thing for many families that pay a tremendous cost for drugs. With a traditional Medicare plan, there is no drug coverage and you must purchase a Medicare Part D that was mandated by the federal government under President Bush or pay a penalty for each month you do not have it, forevah. I like that because republicans get all pissy pants about the "unprecedented mandate that Obamacare put on health plans". That mandate by President Bush was put on in about 2003, funny how amnesia works.

  11. Steve Sibson 2014.06.09

    Sad that we have pots calling kettles black and vice-versa. The fundamental problem is that those who receive the benefits don't pay the costs. That is a breeding ground for corruption, whether it is insurance thru corporatism, Medicare, Medicare Advantage, Medicaid, or Obamacare.

  12. Roger Cornelius 2014.06.09

    Sibson made a comment without using his favorite "neo-facism".

  13. Douglas Wiken 2014.06.09

    Cory, has Sanford banned your blog yet? Dakota Today is still on their blacklist. Nobody in any part of the system, including my wife at the local hospital, can look at it. I'd think a multi-millionaire and a million plus per year executive should not feel too threatened by a blog, but we never know.

Comments are closed.