Breaking Up Is Hard to Do

This article was first published on LinkedIn on August 5, 2019. It has been viewed over 1,000 times.

Lots of talk is underway about breaking up big tech companies like Alphabet and Facebook because of their influence and size. Health care has a big influential organization and it’s not a for-profit company. It’s the U.S. government. In 2018, Facebook’s revenue was $56 billion. Alphabet’s was $137 billion. In 2017, Medicare spent $706 billion. That’s 12 and a half Facebooks. If we’re talking about breaking up social media companies because of their influence and size, shouldn’t we consider breaking up CMS, the Centers for Medicare and Medicaid Services, too?

There are a number of reasons why this is a good idea. First off, Medicare is ostensibly a government-run monopoly. It owns the market of individuals aged 65 and up and it is the largest single payer in America. But it’s not just the market share dominance that makes Medicare powerful. It’s also the organization’s parallel ability to set policy that is an issue.

When CMS dictates terms of service, it is de facto setting the standard for patient care delivery in a facility. If Medicare pays for certain things, like a test as a result of a diagnosis, then a hospital is likely to perform that test when other patients who are not on Medicare also get that diagnosis. It’s just too difficult and quite frankly dangerous for providers to be delivering different clinical protocols to patients based on who’s paying. More often than not, if Medicare says so, then the other payers fall in line too.

Most hospitals cannot survive without reimbursements from Medicare. If CMS wants to roll out a rule, then hospitals pretty much have no ability to challenge it. They have to accept the rule, or Medicare won’t reimburse them anymore.

Isn’t that a form or tyranny? The unrestrained exercise of power?

We should consider separating out CMS’ policy and regulatory work (like the Center for Consumer Information and Insurance Oversight which oversees policies related to the ACA, among other things) from its billing and collections activities. Tying these two together in the name of cost reduction and better patient outcomes through value-based programs just hasn’t worked. It’s paradoxical for CMS to pay providers to treat sick people and at the same time, penalize them if the people don’t stay well.

I also think people should age into Medicare later. We’re living longer lives than we did when Medicare was rolled out, so the qualifying age should be pushed up to at least 67.

And here’s a novel idea: we could shrink the program by allowing people to opt out. Right now, about a third of Medicare enrollees are on Medicare Part C, or Medicare Advantage. In this program, Medicare pays private insurers a set fee to manage the care of these patients. Wouldn’t it be great if people were given the option to take the payment that’s given to an insurer for Part C and use it to buy their own insurance? Not everyone needs all the services that Medicare provides. If the government is already outsourcing the management of some Medicare – and most of Medicaid too by the way – then it makes more sense to simply give the funds directly to individuals so they can select the options that work for them.

Medicaid could use some structural reorganization too. Please check out my podcast, “Breaking Up Is Hard to Do” on The Powers Report Podcast to learn more about this important topic.

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