• Medicaid’s return on investment

    It’s time to face the fact that I’m not going to be able read, let alone write a full post on every interesting looking paper in my pile. But you’re hungry for content and want to know what’s potentially worth reading, right? So, expect a few posts that are little more than abstracts of papers I’ve at most skimmed. Maybe they contain a fatal flaw. Maybe they’re awesome. I just don’t have time to find out. Take with a grain of salt.

    Medicaid as an Investment in Children: What is the Long-Term Impact on Tax Receipts?” by David Brown, Amanda Kowalski, and Ithai Lurie:

    We examine the long-term impact of expansions to Medicaid and the State Children’s Health Insurance Program that occurred in the 1980’s and 1990’s. With administrative data from the IRS, we calculate longitudinal health insurance eligibility from birth to age 18 for children in cohorts affected by these expansions, and we observe their longitudinal outcomes as adults. Using a simulated instrument that relies on variation in eligibility by cohort and state, we find that children whose eligibility increased paid more in cumulative taxes by age 28. These children collected less in EITC payments, and the women had higher cumulative wages by age 28. Incorporating additional data from the Medicaid Statistical Information System (MSIS), we find that the government spent $872 in 2011 dollars for each additional year of Medicaid eligibility induced by the expansions. Putting this together with the estimated increase in tax payments discounted at a 3% rate, assuming that tax impacts are persistent in percentage terms, the government will recoup 56 cents of each dollar spent on childhood Medicaid by the time these children reach age 60. This return on investment does not take into account other benefits that accrue directly to the children, including estimated decreases in mortality and increases in college attendance. Moreover, using the MSIS data, we find that each additional year of Medicaid eligibility from birth to age 18 results in approximately 0.58 additional years of Medicaid receipt. Therefore, if we scale our results by the ratio of beneficiaries to eligibles, then all of our results are twice as large.

    So maybe, all in, Medicaid could be break even. Maybe. (Yes, this is the pure economist point of view, as if lives and quality thereof can be easily, unambiguously converted to dollars. And, yes, the framing here suggests — though does not demand — that things are worth doing only if they pay for themselves, which is ridiculous. Good things are worth spending money on.)

    @afrakt

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  • Medicaid patients have better access to primary care than you might think

    The following originally appeared on The Upshot (copyright 2014, The New York Times Company).

    One longstanding concern about Medicaid is that too few doctors will accept it, because it tends to pay providers less generously than private plans do. This concern shows up in news articles about Medicaid, driven by evidence from doctors’ offices. But if you ask Medicaid enrollees directly, they reveal that access to primary care is comparable to that for private plans.

    A report from the inspector general at the Department of Health and Human Services released in late September reinforced concerns about access to care for Medicaid enrollees. As my colleague Robert Pear reported, the inspector general found wide variation across states in access standards. For instance, the maximum travel distance states allow varies from five to 60 miles; the maximum appointment wait times vary from one to 60 days; and the minimum provider density varies from one in 100 to one in 2,500 enrollees, among other standards.

    Worse, the inspector general found that only eight of the 33 states it examined conducted tests to assess whether Medicaid patients’ access to care met their standards.

    Access problems could be exacerbated by the Affordable Care Act, which extends Medicaid coverage to millions more Americans, and expands coverage through private plans. To at least partly address this concern, the law includes an increase in funding for primary care training and in Medicaid payments for primary care visits through this year, and Congress is considering extensions. In its waiver application to allow residents eligible for Medicaid to participate in its state exchange, Arkansas argued thathigher payments to providers were necessary to encourage the supply of care to meet the new demand.

    Medicaid enrollees may, in fact, have to work a bit harder to find a primary care doctor who will see them, but almost all are still able to find one. Using data from a large, nationally representative survey, Genevieve Kenney and colleagues did find that a substantial minority, 11 percent, of new Medicaid enrollees said that they had difficulty making an appointment. But only 2.8 percent said that they could not do so at all. To be sure, the program ideally would provide access for all its enrollees, but a 2.8 percent failure rate is probably a lot lower than most people think and suggests modest improvements may be sufficient to bring that number to zero.

    The researchers also found that Medicaid enrollees who had been covered for at least a full year had no more difficulty obtaining care than those with employer-sponsored coverage. However, Medicaid enrollees were more likely to experience delays in care, but still at a fairly low rate — 8.4 percent, compared with 5.2 percent of low-income adults with employer-sponsored insurance. With one exception, Medicaid and employer-sponsored insurance enrollees were just as likely to receive key types of preventive care. (Those insured through work were five percentage points more likely to receive a flu shot.)

    In 2012, the U.S. Government Accountability Office published similar findings. Based on a large survey of patients, not providers, Medicaid offered comparable access to care as private insurance for consumers with full-year coverage.

    One reason people may think Medicaid primary care access is poor is because of the results of so-called secret shopper calls, the type of assessment the H.H.S. inspector general recommended. These are calls to doctors’ offices from people pretending to be patients, seeking to learn whether appointments can be made and, if so, how soon. Though secret shopper assessments are informative as to the breadth of provider choice Medicaid patients have — an important consideration — they can also mislead.

    Publishing in JAMA Internal Medicine, Karin Rhodes and colleaguesconducted about 11,400 secret shopper calls in late 2012 through early 2013. Primary care offices in 10 states were contacted, accounting for one-third of the Medicaid population. On average, private plan callers were offered an appointment 85 percent of the time and Medicaid callers only 58 percent of the time, suggesting significantly worse access to primary care for Medicaid patients. However, the researchers also found that median wait times were five to eight days for private and Medicaid callers alike, with the exception of Massachusetts, where they were 13 days for private and 15 days for Medicaid callers.

    A prior secret shopper study published in the New England Journal of Medicine by Joanna Bisgaier and Karin Rhodes examined specialty clinics in Cook County, Ill., in 2010. Callers pretended to be either insured by Medicaid or Blue Cross Blue Shield. On average, 66 percent of Medicaid callers were denied an appointment, compared with only 11 percent of privately insured callers. Other secret shopper studies also found worse access to care for Medicaid relative to private coverage.

    But secret shopper studies have important limitations. One is that they tend to compare Medicaid to private plans with the most expansive networks, which may not be a representative standard. Many Americans are enrolled in private plans with more narrow networks, perhaps almost as narrow as that of Medicaid. Another limitation is that differences in the proportion of offices accepting patients do not, by themselves, tell us anything about differences in the quality of health care received or in health outcomes. Such results don’t even reveal the extent to which variations in providers’ willingness to make new appointments translate into patients’ ability to obtain them. This is a subtle, but important, distinction. Asking patients directly paints a more optimistic picture.

    Though doctors may be less willing to accept new Medicaid patients than private patients in some plans, in general Medicaid patients seem to obtain nearly the same access to primary care. Perhaps they do so because they learn which providers to call or they make more calls. Assuming comparable quality, it’s not as worrisome that fewer doctors accept Medicaid if Medicaid patients can still reliably find some doctors who do in a reasonable amount of time.

    Medicaid surely can be improved. It very likely pays some providers too little in some areas, and some of its patients probably experience access problems because of that. No doubt that’s true of some private plans as well. And the results I’ve written about here don’t address access to specialty care, which may be more difficult for Medicaid patients. But Medicaid is also a popular and valuable program, contributing to the health and well-being of many Americans who rely on it.

    The secret shopper approach is undoubtedly the right strategy to assess compliance with state standards written in terms of proportion of doctors accepting patients within certain time and distance margins. But relying on secret shopper calls alone also understates access and provides a ready way to attack the program as woefully inadequate. The direct experience of patients needs to be considered as well.

    @afrakt

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  • AcademyHealth: Three false claims about Medicaid

    The July 2014 Milbank Memorial Fund Issue Brief examined and dismantled erroneous claims about Medicaid including that it’s worse for health than being uninsured. My latest post at AcademyHealth has the details.

    @afrakt

     

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  • Should the Arkansas Medicaid program cover a $239,000/year treatment?

    Chris Conover says it should have the freedom not to do so:

    Last week, an advisory board recommended that Arkansas’s Medicaid program cover Kalydeco, a cystic fibrosis drug [which would cost the program] $239,000 per patient year.  [… B]ecause “ Arkansas appears to be the only state preventing patients who meet the eligibility criteria established by the U.S. Food and Drug Administration” the state is being sued on grounds that its policy violates a federal statute requiring state Medicaid programs to pay for all medically necessary treatments. […]

    [P]art of the reason the Arkansas lawsuit is getting leverage is because of evidence that cost appeared to be a factor underlying the decision to deny coverage for Kalydeco. […]

    The WHO considers a medical intervention to be “not cost-effective” if it costs more than three times a nation’s per capita GDP per year of life saved. With U.S. GDP per capita currently at $51,749, it is pretty obvious that $239,000 lies pretty far outside the bounds of what WHO would deem cost-effective.  […]

    [T]his 7-page National Health Law Program summary of medical necessity under Medicaid highlights the complexity of the problem. The upshot is that “medical necessity” is never defined explicitly either in the Medicaid statute or regulations. It has been fleshed out in case law and administrative rulings.  The Stanford definition of medical necessity which has been adopted by a number of state Medicaid programs [has] a very restrictive definition: “An intervention is considered cost effective if the benefits and harms relative to costs represents an economically efficient use of resources for patients with this condition.”

    Such a definition does not permit administrators to do what the Oregon Medicaid program did many years ago: rank order all treatments by their cost-effectiveness and eliminate from coverage all treatments above a certain cost per added year of life threshold. [Here’s one,* of many, papers on Oregon’s experience with cost-effectiveness ranking.] So how did Oregon get away with adopting cost-effectiveness rankings? By getting a waiver. […]

    Chris goes on to argue that Arkansas, and all states, should be able to apply cost-effectiveness criteria without waivers. More at the link.

    * Apart from the link in brackets, all others are in Chris’s original. They are not mine.

    @afrakt

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  • What’s in a name: Medicaid “beneficiaries” edition

    Maybe I should have known this. Maybe I did know it and forgot. Maybe there’s a good reason for that.

    Surely the ACA’s implementers knew what they were doing when they began a campaign to convert all relevant Code of Federal Regulations language from Medicaid enrollees to Medicaid beneficiaries. Medicaid enrollees have always just been that—unlike Medicare beneficiaries—a naming convention emphasizing the provisional, conditional nature of the Medicaid entitlement. And the announcement accompanying the change acknowledged as much.

    The Code of Federal Regulations was revised on 15 and 16 July 2012 to change the word “recipient” to “beneficiary.” The following is excerpted from 77 FR 29002-01, which appeared on May 16, 2012 in the Federal Register:

    Removal of the Term “Recipient” for Medicaid: We have removed the term “recipient” from current CMS regulations and made a nomenclature change to replace “recipient” with “beneficiary” throughout the CFR. In response to comments from the public to discontinue our use of the unflattering term “recipient” under Medicaid, we have been using the term “beneficiary” to mean all individuals who are eligible for Medicare or Medicaid services.

    Just what is unflattering about the term “recipient” may be understood only in context; similarly, what is empowering about “beneficiary” may also only be understood in context. Medicare and Medicaid beneficiaries now stand on equal dignatorial ground.

    That’s from Ann Marie Marciarille’s “The Medicaid Gamble.”

    By and large, I tend to call people on Medicaid “enrollees,” and probably still will. There are two problems with “beneficiary.” First, it’s considered jargon and, apparently, is confusing or foreign to readers not steeped in health policy. Still, I do use the term, typically for people on Medicare, for which no active effort is required to receive the benefit.* Second, despite what they’re called, that’s just not the case for people on Medicaid. They really do have to enroll to benefit. So, I take issue with “beneficiary” even if it’s the regulation.

    * UPDATE: This is only true for age-based Medicare eligibility.

    @afrakt

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  • AcademyHealth: Health care spending straining state and local budgets

    Health spending growth is crowding state and local spending in other areas of need. But Medicaid expansion is not to blame. What is? Click to read the answer in my post on the AcademyHealth blog.

    @afrakt

     

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  • Medicaid Gives the Poor a Reason to Say No Thanks

    The following originally appeared at The Upshot (copyright 2014, The New York Times Company).

    There are generally two ways that people with insurance pay for health care in the United States: premiums, which get you insurance before you receive care, and a variety of cost-sharing mechanisms — like deductibles, co-pays and coinsurance — that come into play when you do receive it.

    While Medicaid, our safety net program for the poor, has used cost-sharing mechanisms for some time, it has been prohibited from asking people to pay premiums. In the last couple of years, federal regulators have started lifting that prohibition, which is likely to lead to some negative consequences.

    Cost-sharing mechanisms are specifically intended to encourage people to consume less health care. As I have discussed in previous articles, a large body of research shows that increased cost-sharing leads to decreased utilization. The more you ask people to pay at the point of care, out of their own pockets, the less likely they are to obtain it.

    As a recognized means to reduce health care utilization and spending, insurance plans have been using cost-sharing for decades. Almost all state Medicaid programs allow for cost-sharing, usually as some form of minimal co-payments for services or drugs.

    Premiums, however, are different. They are the mechanism by which insurance companies collect the vast majority of the money that they need to cover health care costs for their beneficiaries. They are not intended to affect health care spending, as they are collected before any actual care is used. They’re the means by which most of health care spending is paid for. When health care spending goes up, insurance companies raise premiums accordingly. Now that increases are regulated on exchanges by the federal government, private insurance companies must justify premium growth with data showing that spending on health care has gone up enough to warrant increases.

    Premiums are not a means to influence whether or not an individual uses services. They’re a means to purchase insurance. It is for this reason that, until recently, premiums were not allowed in any Medicaid programs at all for anyone earning up to 150 percent of the federal poverty line. After all, if people were poor enough to qualify for Medicaid, there’s simply no way that they could afford any substantial part of its cost.

    This year, the average annual premiums for an employer-sponsored insurance plan for an individual were slightly more than $6,000. Just two years ago, Medicaid spent an average of $6,641 per person covered. In order to be below 150 percent of the federal poverty line, a person needed to earn less than $16,755 that year. The reason we traditionally provided Medicaid for such people without charging them any premium is that, after paying for the necessities of life, there really is no way that they could cover any significant percentage of the costs of their health care.

    Nevertheless, a number of states are now, for the first time, asking recipients to pay a premium for their Medicaid. In Indiana, the proposed Medicaid expansion, known as HIP 2.0, requires people making up to 138 percent of the poverty line to pay up to $25 a month to receive coverage. In Iowa, Medicaid recipients making more than the poverty line are expected to contribute $10 a month in premiums; those making 50 percent to 100 percent of the poverty line may need to pay $5 a month. In Pennsylvania, individuals making more than the poverty line may be asked to pay $25 a month. In Michigan, those making more than the poverty line must pay 2 percent of their income in premiums.

    Many might argue that these are not large sums of money. Indeed, when compared with the cost of care for the average Medicaid beneficiary, they are insignificant. That’s the point. Premiums are supposed to cover much of the cost of care. That’s why insurance with a higher actuarial value has higher premiums.

    But when it comes to Medicaid, the proposed premiums barely cover any of the cost of care at all. In fact, it’s possible that the administrative costs of collecting them may be significant compared with the amount collected. If so, why bother? Proponents of these premiums often use terms like “personal responsibility” and “skin in the game.” But these are terms usually used to justify increases in co-pays, coinsurance or deductibles; they are rarely thrown around when your private insurance plan needs to raise its premiums.

    And cost-sharing is how these “premiums” may actually play out. A recent study in the journal Health Affairs found that a $10 increase in monthly Medicaid premiums resulted in a 6.7 percent reduction in Medicaid and the federal Children’s Health Insurance Program coverage for families earning between 100 percent and 150 percent of the poverty line. It also resulted in a 3.3 percent increase in the uninsured. These small premiums may lead people not to obtain insurance.

    This mirrors work published earlier this year by Laura Dague in the Journal of Health Economics. She looked at how small premiums affected enrollment in the Wisconsin Medicaid program, and found that the creation of a $10 monthly premium was associated with a 12 percent reduction in the likelihood of people remaining enrolled in Medicaid for a full year.

    In other words, these premiums may be functioning as cost-sharing. They may be driving people away. They may be discouraging people from obtaining insurance.

    This may, of course, be part of the purpose. It’s estimated that more than280,000 people would be eligible for a Medicaid expansion in Pennsylvania. Getting 12 percent of them to refuse coverage would save the government more than $200 million. That’s a very rough estimate, of course, but the potential savings from disenrollment greatly outweigh whatever Pennsylvania might collect in premiums from the people who do enroll.

    It’s reasonable, although sometimes inadvisable, to ask people to pay more when they are actually about to obtain medical services. Cost-sharing is a mechanism to prevent people from overusing health care. Signing up for health insurance isn’t the point at which we do that, though. Premiums aren’t supposed to be a means to discourage people from gaining access to the health care system. But that seems to be how they’re functioning in Medicaid.

    @aaronecarroll

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  • Crowd sourcing fraud detection

    Medicare and Medicaid have active fraud detection units that are setting records for recoveries. The HHS effort is not entirely in-house, but also partners with insurance companies and other stakeholders to detect fraud. And yet the programs suffer billions in “improper payments:”

    chart

    Source: GAO 2012

    We need some fresh ideas. Perhaps we could use crowd sourcing, like the work that Charles Ornstein at ProPublica is doing with Medicare biller data that was recently made public:

    On Friday, I emailed you my story about how a misdirected fanny pack unraveled a Medicare fraud scheme.

    I’m back today with another story that was buried in Medicare’s doctor data dump, about why Illinois leads the nation in group psychotherapy sessions for patients. I found three ob/gyns and a thoracic surgeon who were paid for more than 37,000 psychotherapy sessions in 2012—more than all providers in the state of California COMBINED…

    The billings for group psychotherapy reveal other unusual patterns. A Queens, N.Y., primary care doctor, Mark Burke, was paid for more sessions than anyone else in the country — 20,841. He accounted for nearly one in every six sessions delivered in the entire state of New York in Medicare, separate data show. He did not return messages left at his office.

    Another large biller was Makeba Gordon, a social worker in Detroit. She was reimbursed for nearly 5,000 group therapy sessions for her 26 Medicare patients, an average of 190 each. She also billed for 2,820 individual psychotherapy visits for the same 26 patients, who allegedly would have received an average of 298 therapy sessions apiece in 2012. Gordon could not be reached for comment. [see the Chicago Tribune].

    If we really wanted to jumpstart fraud detection, we’d give a reward for identifying cases like this. Whistleblowers can receive 25 – 33% of the settlement, but crowd sourcing (and investigative reporting like this) won’t qualify because the key data was public, hidden in plain sight.

    UPDATE: The FY 2013 improper payments numbers didn’t report Medicare Part D, but note how the estimates vary over time:

    2013 chartSource: GAO 2014

    UPDATE 2: Good points from twitter & email:

    1.  Not all “improper payments” are fraud. Fraud requires proof of intent; “improper payments” could be innocent mistakes – see the definition in the GAO reports (h/t Paul Van de Water)
    2.  Before we heap condemnation on the gov’t for high rates of “improper payments,” what is the rate for comparable private businesses? (h/t Ezra Abrams)
    3.  HHS has a small rewards program for information leading to recoveries, but it is capped at the lesser of 10% of the recovery or $1000. (Details here.) Remove the cap and publicize the program = crowdsourcing fraud prevention.” (h/t @FrankPasquale)

    @koutterson

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  • The effect of Medicaid on educational attainment

    From The Effect of Child Health Insurance Access on Schooling: Evidence from Public Insurance Expansions, by Sarah Cohodes, Samuel Kleiner, Michael Lovenheim, and Daniel Grossman (NBER, 2014):

    The effect of Medicaid expansions on access to healthcare and on subsequent child health has been studied extensively, (e.g., Currie and Gruber, 1996a, 1996b; Moss and Carver, 1998; Baldwin et al., 1998; Cutler and Gruber, 1996, LoSasso and Buchmueller, 2004; Gruber and Simon, 2008), typically showing that Medicaid expansions increase healthcare access, decrease infant mortality, and improve childhood health. Furthermore, these expansions and Medicaid access more generally have been linked to a lower likelihood of bankruptcy and to less medical debt (Gross and Notowidigdo, 2011; Finkelstein et al., 2012). If Medicaid leads to better health outcomes among children and to more stable finances among low-income households, as suggested by prior research, Medicaid expansions could lead to long-run benefits for affected children.

    But the effect of Medicaid expansion for children on their educational attainment has not been studied, until this paper.

    We find consistent evidence that Medicaid exposure when young increases later educational attainment. A 10 percentage point increase in average Medicaid eligibility between the ages of 0-17 decreases the high school dropout rate by 0.5 of a percentage point, increases college enrollment by between 0.7 of a percentage point and 1.0 percentage point, and increases the four-year college attainment rate (i.e., BA receipt) by 0.9-1.0 percentage point. These estimates translate into declines in high school non-completion of about 5%, increases in college attendance of between 1.0% and 1.5% and increases in BA attainment of about 3.3%-3.7% relative to the sample means.

    Go read Adrianna for more on this study.

    @afrakt

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  • Massaging Medicaid

    A week-and-a-half ago, the D.C. Circuit upheld the criminal conviction of the owner of a clinic that bilked Medicaid out of millions of dollars:

    [Jacqueline] Wheeler owned and managed the [clinic]. Between January 2006 and April 2008, Wheeler, who was wholly responsible for all of the [clinic’s] medical billing, submitted bills to Medicaid for more than $8 million in treatment allegedly provided. Medicaid paid the [clinic] roughly $3.5 million on those bills, $3.1 million of which was for massage treatments.

    Acting on a tip that the [clinic] was cheating Medicaid, the Inspector General of the U.S. Department of Health and Human Services began an investigation in 2008. The FBI and Medicaid’s Fraud Control Unit soon joined the effort. Investigators easily concluded that many of the [clinic’s] bills to Medicaid were false. For example, several bills claimed that the [clinic] had given more than twenty-four hours of massage therapy to a single patient on a single day. Others reported hundreds of hours of massage therapy for days when only one therapist was on staff. Some sought payment for the treatment of patients hospitalized elsewhere.

    What’s demoralizing is the familiarity of this story. Back in 1997, the D.C. Circuit issued another opinion involving a Washington, D.C. physician who claimed he worked more than 24 hours in a day. Any halfway-sophisticated computer system should have uncovered fraud this blatant. Well over a decade later, however, Wheeler was able to do exactly the same thing. Even then, it took an informant’s “tip” to clue officials into the fraud.

    Wheeler’s claims for never-ending massages should never have been paid. Yet Medicaid, as with Medicare, generally pays first and asks questions later. The government calls this “pay and chase,” and the predictable result is that a lot of pretty obvious fraud slips through. Stephen Parente and his co-authors have estimated that improving the technology for processing claims would save Medicare about $21 billion per year—and that’s without any close scrutiny of medical records. (Austin discussed the Parente study here.)

    Keep that figure in perspective: even $21 billion is a small fraction of the $500 billion per year Medicare program. And there’s no good data on whether Medicare and Medicaid fraud is more prevalent than fraud against private insurers. Even so, why not take more assertive steps to prevent fraud before it happens? The practice of giving cursory scrutiny to Medicare and Medicaid claims threatens to erode confidence in programs that serve urgent public needs.

    We’re doing more chasing nowadays, to be sure. Last year, for example, the federal government recovered $4.3 billion in fraudulent Medicare and Medicaid payments. The Justice Department and HHS crowed that, “for every dollar spent on health care-related fraud and abuse investigations … the government recovered $8.10. This is the highest three-year average return on investment in the 17-year history of the [fraud-prevention program].”

    But what does that rate of return imply? It’s possible that we’re ferreting out more fraud. It’s also possible, however, that Medicare and Medicaid are paying out more dubious claims than ever—and that $4.3 billion is just the tip of the iceberg. When the Armenian mafia decides that Medicare fraud is a growth area, you’ve got a major problem on your hands.

    Criminal convictions and big fraud settlements are important, but they’re not enough. Medicare and Medicaid have to do more to prevent fraud from occurring in the first place—and, indeed, CMS is already taking tentative steps in that direction. No question, there are tradeoffs here. It will be costly to improve computer systems, to monitor compliance with program rules, and to scrutinize claims. Hassled providers will howl. But the Jacqueline Wheelers of the world will continue to submit abusive claims unless Medicare and Medicaid develop the systems to reject them.

    @nicholas_bagley

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