Chapter Synopses

Chapter 1 - Death Rode a Pale Horse in 2020

This chapter examines the failures and shortcomings of the United States healthcare system during the Covid-19 pandemic.

Chapter 2 - The Medicaid Cluster

This chapter focuses on the issues of fraud, waste, and abuse in the healthcare system. The chapter begins by highlighting the staggering amount of money spent on healthcare in the United States and how a significant proportion is attributed to improper payments. Large dollar amounts are cited from reports by the U.S. Government Accountability Office (GAO) estimating improper Medicaid payments.

Chapter 3 - Where Does the Drug Money Go?

This chapter discusses moral hazard in financial transactions and how it applies to healthcare. It delves into the cost of prescription drugs in the United States, with Senator Amy Klobuchar’s statement about prescription drugs being nearly 20 percent of healthcare costs sparking a debate. The chapter explains how drug costs are determined based on federal law and highlights gaming of the system through a practice called “the spread,” which contributes to higher drug prices in the U.S. compared to other countries.

Chapter 4 - Money, Politics, and Data

Chapter 4 explores the intersection of money, politics, and data in relation to healthcare. The chapter begins by introducing Ross Perot, the founder of Electronic Data Systems (EDS), who later became a prominent figure in American politics. Perot’s entrepreneurial journey started with his dissatisfaction as a tope salesman at IBM and his decision to take his life in a different direction after reading a quote form Henry David Thoreau.

Chapter 5 - Required Profits and MCOs

This chapter explores the concept of required profits and Managed Care Organizations (MCOs) in the healthcare industry. The chapter begins with a reference to a movie that satirizes ruthless corporations and their demand for high returns on investment. It then delves into the topic of MCOs, stating that they typically require a 15 percent return on investment, although most actually make higher returns. The chapter argues that this required profit is pure shareholder profit and adds to healthcare costs.

Chapter 6 - Coding and Billing

This chapter begins by introducing the importance of understanding healthcare costs and how they form public policy. It explains that when seeking healthcare services, patients must complete various forms that gather demographic information, health history, and consent for treatment. The coding and billing process begins as soon as these forms are completed. The chapter then explore epidemiology through the story of Dr. John Snow’s investigation into a cholera outbreak in London in 1954. This serves as an example of systematic data collection to identify transmission patterns and causes.

Chapter 7 - The Curious Case of CPT Code 92507

This chapter begins by discussing how healthcare costs are typically studied from a macro level, examining large-scale patterns of expenditures. It highlights that studying specific individual healthcare codes can provide a micro-level analysis and shed light on cost issues that are difficult to observe otherwise. That chapter again highlights how Dr. John Snow’s pioneering work in disease mapping services as inspiration for the micro-level analysis approach. By plotting data points, services provided to clusters emerge that reveal significant increases in cost.

Chapter 8 - Curiouser and Curiouser

Chapter 8 delves into the issue of overpayment in the healthcare industry, specifically focusing on a case where one state overpaid by more than $600 million for a single procedure code within a two-year period. The chapter begins by acknowledging that to understand the significance of the situation, it is necessary to discuss the dry regulations governing Medicaid and how they impact healthcare spending.

Chapter 9 - Managed Care Organizations

Chapter 9 focuses on Managed Care Organizations (MCOs) and their role in evaluating healthcare costs. The chapter begins by discussing the significant share of healthcare services funded by the federal government, particularly through Medicaid. It highlights Texas as one of the few states that has not expanded its Medicaid program under the Affordable Care Act but ranks third in Medicaid spending. The chapter also questions whether MCOs can effectively reduce healthcare costs while maintaining quality care if they reimburse at higher rates than what would be paid directly to providers. Furthermore, the chapter examines whether MCOs can achieve cost reduction while improving quality care outcomes.

Chapter 10 - Regulations and Estimates

This chapter examines regulations and estimates in healthcare finance at both state and national levels. The chapter begins by discussing an insured arrangement in Texas during George W. Bush’s tenure as governor, where actuarial projections were used to estimate Medicaid costs for the state budget. However, reductions were made to these estimates, resulting in a $600 million shortfall over two years. The chapter then explores the shift towards managed care models and the push toward cost-saving measures. The chapter concludes by emphasizing that poor costing systems have lead to rapid increases in Medicaid manage care spending over the past two decades. It is argued that accurate cost measurement is crucial for managing and improving healthcare outcomes effectively.

Chapter 11 - Regulation Failures

Chapter 11 focuses on regulation failures in healthcare, specifically regarding third-party recovery and site-neutral requirements. This chapter begins by discussing the importance of estimates in computing expected costs for private insurance plans and government-funded plans, emphasizing the “pay and chase” philosophy that Medicaid has adopted. This philosophy means that payors err on the side of paying a claim first and then recoup if it is later deemed erroneous. The chapter then focuses on the Medicaid program, explaining its joint funding by individual states and the federal government. It highlights that while there is great variety amount states in terms of eligibility requirements, covered benefits, and payment policies, some benefits are mandatory. The chapter explains how site neutrality can lead to significant cost savings throughout healthcare. Site-neutral payments refers to paying the same rate for services regardless of where they are provided.

Chapter 12 - Cost-Shifting and the Flip and Roll

This chapter explores the issue of cost allocation in healthcare and the controversial concept of cost-shifting. The chapter discusses how healthcare costs are constantly disputed and allocated amount different population groups, diseases, and and time periods. Proper identification and allocation of healthcare costs is a major challenge in controlling costs at a macro level. The chapter also discusses macro-accounting and cost identification challenges in healthcare finance. It highlights the complexity of allocating fixes costs among patients and the lack of desire or political will to identify and account for costs accurately.

Chapter 13-Scams with Teeth, Regulations without Teeth

Chapter 13 addresses the cost of dental healthcare, the rise of dental support organizations (DSOs), and how fraud, waste, and abuse contribute to rising costs. The chapter begins by discussing the increasing spending on dental services in recent years and highlighting the prevalence of fraud, waste, and abuse in the dentistry industry. It presents a notable case involving a dentist who was accused of billing Medicaid for services not rendered and showcases the challenges faced by authorities in proving illegal acts.

This chapter provides a comprehensive analysis of the issues plaguing dental healthcare, including rising costs, fraud, waste, abuse, unethical practices within DSOs, improper treatment under sedation dentistry, and corporate influence on patient care decisions.

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Chapter 14-Solutions for Unauditable Hospital Costs

Chapter 14 focuses on the issue of unauditable hospital costs and explores potential solutions. The chapter begins with an attention-grabbing quote from Dante's Inferno, which sets the tone for the discussion on hospital costs. It then proceeds to provide background information on healthcare spending in America and the challenges posed by the free-market philosophy in healthcare.

The text then delves into the power dynamics between hospitals and patients, emphasizing how hospitals hold dominant negotiating positions during medical emergencies. It highlights the financial burden faced by uninsured individuals during the COVID-19 pandemic, where hospital care for COVID-19 could exceed their annual salary.

Transparency in pricing is crucial for auditing hospital costs effectively. Using audited chargemasters as a benchmark for reasonable pricing standards is proposed similar to other industries subject to audits.

The chapter concludes by discussing recent attempts towards increased cost transparency in hospitals but highlights difficulties in implementation and resistance from industry stakeholders. It emphasizes that adapting existing methods used in other sectors such as cost accounting can help bring hospital costs under control.

Chapter 15-Unnecessary Surgeries and Tests

Chapter 15 explores the issue of unnecessary surgeries and tests in the medical profession. The text delves into examples of unneeded major surgeries, such as hysterectomies, emphasizing the difficulty for patients to make decisions when their health is at stake. A case involving a Virginia obstetrician and gynecologist who performed medically unnecessary surgeries on numerous patients is highlighted. This doctor was convicted on federal charges including health care fraud and false statements.

The chapter further addresses unnecessary testing in healthcare, pointing out that it not only wastes resources but can also harm patients. Financial incentives and defensive medicine are identified as factors contributing to over-testing practices. The text concludes by raising questions about checks and balances within the medical profession to prevent unnecessary procedures driven by greed.

This chapter provides an eye-opening exploration of the prevalence of unnecessary surgeries and tests in healthcare while questioning how well doctors adhere to their oath to "First, do no harm."

Chapter 16-Ethics in Healthcare Billing

Chapter 16 focuses on ethics in healthcare billing, specifically addressing overbilling and fraud within the U.S. healthcare system. The chapter opens by highlighting the various factors that have contributed to the bloated and expensive nature of the American healthcare system, including growth incorporation, profitization in medicine, insurance company payment rules, and government regulation. It discusses how these factors have incentivized physicians to optimize profits and reimbursement.

The chapter emphasizes that ethical concerns are not limited to physicians but extend to all licensed professional providers in healthcare who bill based on their credentials rather than as part of institutional services. It also highlights efforts by organizations like the AMA's Journal of Ethics and CMS's fraud prevention system using data analytics and big data technology to identify waste, fraud, and abuse patterns.

The text concludes by discussing challenges faced when analyzing data analytics due to inconsistent reporting requirements across different provider types and place-of-service variations in reimbursement rates. It raises concerns about the lack of monitoring systems for assistants and calls for more comprehensive approaches to address waste, fraud, and abuse in healthcare billing.

Chapter 16 provides a detailed examination of ethics in healthcare billing, illustrating the need for legislation and improved monitoring systems to combat fraudulent practices and ensure appropriate quality medical care.

Chapter 17-Adding Up the Costs

Chapter 17 explores the totality of costs associated with healthcare in the United States. The chapter emphasizes how a significant percentage of Americans either lack insurance or have limited coverage that leaves them vulnerable to high medical expenses and fear of illness. It cites a study reporting that thousands die each year due to lack of access to healthcare and health insurance. Furthermore, it highlights how even insured individuals with high deductibles and restrictions on their policies often avoid seeking necessary care because it is unaffordable. It addresses overcharging practices which contribute significantly to the financial burden of healthcare. The authors argue that while profits are essential, they often cross into profiteering within the healthcare sector. They discuss how increased transparency and analysis of costs can help control healthcare expenses.

The chapter concludes by emphasizing the need for addressing waste, fraud, and abuse in the industry as these factors significantly drain resources from the economy and exacerbate economic disparities. It calls for improved accountability, implementation of cost-saving measures, elimination of industry-favoring regulations, and a focus on making both Americans and their healthcare system healthier overall.