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Sometimes, it's easy to overlook the business challenges that some doctors face in running a small practice. KFF Health News published an article about how some pediatric clinics ordered too much COVID-19 vaccines, and had to throw out expired inventory. Although pediatric clinics face similar questions for some other vaccines, it seems that COVID-19 vaccines have a relatively short shelf life, exacerbating the situation.

Sometimes, it's easy to overlook the business challenges that some doctors face in running a small practice. KFF Health News published an article about how some pediatric clinics ordered too much COVID-19 vaccines, and had to throw out expired inventory. Although pediatric clinics face similar questions for some other vaccines, it seems that COVID-19 vaccines have a relatively short shelf life, exacerbating the situation.

It seems that some of these concerns can be solved systematically if manufacturers were willing to shoulder more risk and make enough vaccines available on short notice (for example, by streamlining their manufacturing process to be "just in time"). Given that pediatricians might be stocking smaller quantities of the vaccine -- which might lead to shortages at those clinics -- manufacturers might have a financial incentive to figure out how to reduce the uncertainty that pediatricians face when deciding how much to order.

The government frequently has a reputation of being inefficient, so one can imagine how proponents of Medicare Advantage probably pitched the idea of letting private insurance companies take over: let private industry, unshackled by government bureaucracy, innovate and find new ways of improving quality while also decreasing costs. However, KFF Health News reported on a civil fraud case against the health insurance company administering the largest Medicare Advantage plan. Although Medicare was to pay a predetermined dollar amount per patient per month (thus potentially leaving private insurance companies with extra costs if patients needed more care), it turns out that the dollar amount per patient could vary, depending on how sick the patient was. On one level, it makes sense that sicker patients will need more treatment (and therefore cost more) than healthy patients. Practically, however, this policy gave insurance companies a strong incentive to find reasons to classify their patients as sicker than average. The fraud case against this particular insurance company started in 2011 and was taken over by the Department of Justice (DOJ) in 2017. At the heart of the case is whether or not the insurance company improperly claimed that patients were sicker than they actually were. In one case, for example, "the insurer billed Medicare nearly $28,000 in 2011 to treat a patient for cancer, congestive heart failure, and other serious health problems that weren't recorded in the person's medical record." Notably, this insurer was not the only one accused of wrongdoing.

The government frequently has a reputation of being inefficient, so one can imagine how proponents of Medicare Advantage probably pitched the idea of letting private insurance companies take over: let private industry, unshackled by government bureaucracy, innovate and find new ways of improving quality while also decreasing costs. However, KFF Health News reported on a civil fraud case against the health insurance company administering the largest Medicare Advantage plan. Although Medicare was to pay a predetermined dollar amount per patient per month (thus potentially leaving private insurance companies with extra costs if patients needed more care), it turns out that the dollar amount per patient could vary, depending on how sick the patient was. On one level, it makes sense that sicker patients will need more treatment (and therefore cost more) than healthy patients. Practically, however, this policy gave insurance companies a strong incentive to find reasons to classify their patients as sicker than average. The fraud case against this particular insurance company started in 2011 and was taken over by the Department of Justice (DOJ) in 2017. At the heart of the case is whether or not the insurance company improperly claimed that patients were sicker than they actually were. In one case, for example, "the insurer billed Medicare nearly $28,000 in 2011 to treat a patient for cancer, congestive heart failure, and other serious health problems that weren't recorded in the person's medical record." Notably, this insurer was not the only one accused of wrongdoing.

So, does Medicare Advantage save the government money? Apparently not. The Commonwealth Fund reports that "Older and more recent studies alike have largely found that Medicare Advantage plans cost the government and taxpayers more than traditional Medicare on a per beneficiary basis. In 2023, that additional cost was about 6 percent, down from a peak of 17 percent in 2009." In addition to sampling patient records for appropriateness, perhaps Medicare should consider a policy where insurers that consistently cost more than Medicare's average would either be ineligible to continue operating Medicare Advantage plans, or would need to charge its patients the difference in higher premiums.

Consumers are well aware of companies with difficult customer service experiences in a variety of industries, and health care is not an exception. KFF Health News published a piece on how a woman went in for one procedure and the surgeon decided to complete a separate preventative procedure while she was unconscious. Although the entire operation completed in the original time allotment for the initial procedure, the surgery center billed her twice, once for each procedure.

Consumers are well aware of companies with difficult customer service experiences in a variety of industries, and health care is not an exception. KFF Health News published a piece on how a woman went in for one procedure and the surgeon decided to complete a separate preventative procedure while she was unconscious. Although the entire operation completed in the original time allotment for the initial procedure, the surgery center billed her twice, once for each procedure.

From a systems perspective, it makes sense that the surgeon completed the second procedure instead of having her undergo anesthesia again and to make another incision. However, the surgery center's decision to double bill -- even though the entire operation completed in the originally allotted time -- seems unreasonable. For a case like that, it feels that the patient should have some agency in deciding whether to incur the additional cost. Beyond that, the surgery center was unwilling to negotiate with the patient, handing her bill to a collections agency, which sued her in court. If cases like these persist, the general public might ask for additional regulations around medical billing.

Given that federal subsidies for Affordable Care Act (ACA) plans is around $1 trillion, one would expect find to attempts to defraud the system. For example, one area that recently came to light was that many insurance agents change enrollment of existing patients without their knowledge or consent. KFF Health News reported on another way that people may try to defraud the system: understating their estimated income to receive more generous subsidies.

Given that federal subsidies for Affordable Care Act (ACA) plans is around $1 trillion, one would expect find to attempts to defraud the system. For example, one area that recently came to light was that many insurance agents change enrollment of existing patients without their knowledge or consent. KFF Health News reported on another way that people may try to defraud the system: understating their estimated income to receive more generous subsidies.

The article discusses a study that concludes that too many people sign up and declare that their estimated income falls within a certain range: "We estimate that fraudulent enrollment at 100 percent to 150 percent FPL [federal poverty line] is likely upwards of four to five million people in 2024. We estimate, conservatively, that this cost will likely be upwards of $15 to $20 billion this year." Apparently, during open enrollment, patients only need to estimate their income for the following year in order to determine how much subsidy they are entitled to. Theoretically, differences between estimated income and actual income will balance out when those patients file taxes for the following year. For example, patients whose incomes are higher than estimates would owe the difference in subsidies as additional tax. However, patients whose income is less than 400% of the federal poverty line would have the difference in subsidies capped (e.g. $950 for those between 200% and 300% of the federal poverty line). On one hand, the limit seems helpful in protecting patients against the financial consequences of unexpected rise in income. On the other hand, these limits present a tremendous incentive for people whose income is less than 400% of the federal poverty line to underestimate their income to receive more generous subsidies and then to only pay back a limited amount. Essentially, the federal government is subsidizing health insurance plans more than it planned to.

By law, Medicare had been restricted from negotiating drug prices with pharmaceutical manufacturers. That is changing, but Medicare is currently still limited in the number of drugs that it can negotiate. In contrast, KFF Health News published an article about weight loss drugs, including how Denmark was able to secure pricing that is about 15% of the list price of Ozempic in the U.S. It seems highly unlikely that Denmark would have been able to get the discounted price if it did not have the ability to refuse coverage for the drug.

By law, Medicare had been restricted from negotiating drug prices with pharmaceutical manufacturers. That is changing, but Medicare is currently still limited in the number of drugs that it can negotiate. In contrast, KFF Health News published an article about weight loss drugs, including how Denmark was able to secure pricing that is about 15% of the list price of Ozempic in the U.S. It seems highly unlikely that Denmark would have been able to get the discounted price if it did not have the ability to refuse coverage for the drug.

Weight loss drugs present an interesting opportunity in that they may be considered optional medication -- that is, obese patients are not expected to suddenly die because of a lack of access to the medication. As such, the public is likely to be more understanding if a payer (the government, in Denmark's case) decides to not cover it, giving the payer more leverage.