Family Health Costs Up 7% or More in One Year

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One overlooked cost booster may be the RAC or Post-Payment Recovery Contractor (RAC) Audit.

Karen L. Smith, MD
"The escalating costs of health care cannot be subsidized by monies taken from the businesses of small physician practices."

Of all the hassles third-party payors have imposed on physicians, few are more onerous than Medicare’s “Recovery Audit Contractor” program, aka the RAC Audits. Under this program, free-agent auditors contracted by Medicare’s managed care subsidiaries, comb through claims data looking for indicators of overpayment, and then try to reclaim.

The auditors--some call them bounty hunters--may lack medical training, but they don’t lack incentive: they keep a slice of any reclaimed fees. They can show up unannounced, operate with impunity, and cause enormous personal and professional upheaval.

Karen L. Smith, a solo integrative family physician in Raeford, NC, spent the last five years fighting a RAC Audit. It began in 2005, when badge-bearing auditors representing Cigna Medicare showed up, claiming she’d been over-payed $1,551 for 91 billed services. Using an imaginary sample of 2,935 Medicare patients (Dr. Smith only had 1,287 Cigna Medicare patients) and an extrapolation formula known only to them, they claimed she owed the Fed $48,245!

With the help of a coding consultant and a good lawyer, she appealed, and CMS reviewers reduced her “obligation” to just over $18,000. Believing she had done no wrong, she considered further appeals but the legal fees and emotional toll dissuaded her. “The ‘Guilty until proven innocent’ audit we endured utilized sampling and extrapolation calculations that were not verified,” Dr. Smith says.
See also: http://www.youtube.com/watch?v=3v4Sq7oDCgo&feature=email

Family of four healthcare costs $18,074
SEATTLE, May 11 (UPI) -- The cost of healthcare for a U.S. family of four is $18,074, an increase of $1,303 from last year -- the highest ever, a consulting firm says.

The Milliman Medical Index, created by Milliman Inc., an independent actuarial and consulting firm based in Seattle, tracks the changes in average annual healthcare costs for a U.S. family of four among 14 metropolitan areas covered by an employer-paid preferred provider organization.

"The cost of group insurance continues to increase at a historically-consistent pace, even with reform now the law of the land," study co-author Lorraine Mayne, Milliman principal and consulting actuary, says in a statement.

"The cost of group insurance continues to increase at a historically-consistent pace, even with reform now the law of the land. While there will be short-term cost implications, especially for particular employees and certain employers, this year reflects a continuation of the prevailing cost trends."

The healthcare cost for the family of four is calculated by the number, type and cost of healthcare services and how much the employee's health plan pays the medical providers for the services.

The medical costs range from more than $20,000 in New York, Miami and Chicago to $16,071 in Phoenix, the study said.

The complete Milliman Medical Index is at www.milliman.com.
© 2010 United Press International, Inc. All Rights Reserved.

US cancer costs double in 2 decades, blamed on more patients

I appreciated what I heard Ted Turner say today about how the news business has become almost totally a reading of the AP wire releases.

I wonder where the AP story is that addresses the concern regarding why it is that there is such a sharp rise in cancer patients. Don't hold your breath for this story coming from AP, but it is something you can expect to read more about at Natural Health News - Stay Tuned, it may be the topic of an upcoming program on herbalYODA Says! LIVE.

By MIKE STOBBE, AP Medical Writer – Mon May 10
ATLANTA – The cost of treating cancer in the United States nearly doubled over the past two decades, but expensive cancer drugs may not be the main reason why, according to a surprising new study.

The study confounds conventional wisdom in several respects. The soaring price of new cancer treatments has received widespread attention, but the researchers conclude that rising costs were mainly driven by the growing number of cancer patients.

The study also finds cancer accounts for only 5 percent of total U.S. medical costs, and that has not changed in the last few decades.

"I will say I'm a bit surprised," said Dr. Len Lichtenfeld of the American Cancer Society, who said he would have expected the proportion of cancer costs to rise.

The researchers also found that private insurers now cover a greater share of cancer treatment costs — about 50 percent — while patients' out-of-pocket costs have fallen over the past two decades.

Though taken aback by some of the findings, Lichtenfeld and other experts did not dispute the study, which compared medical cost data from the late 1980s to that of the early 2000s. But they said the picture surely has changed in the last several years.

The study is being called the first to combine national cancer costs for all types of payers and see how they've changed over time. The figures are reported in 2007 dollars.

It found that cancer treatment costs rose from nearly $25 billion in 1987 to more than $48 billion by the end of 2005.

The rise in costs is mainly due to an increase over 20 years in how many cancer patients there are, said the study's lead author, Florence Tangka of the U.S. Centers for Disease Control and Prevention.

The researchers used data from national telephone surveys done in 1987 and from 2001 through 2005, which gathered information on medical conditions as well as who paid the bills. More than 164,000 people were surveyed.

The study did not offer precise estimates of how the number of people treated for cancer changed from the late 1980s to the early 2000s. But it showed dramatic increases in the number of cancer cases covered by the government's Medicare and Medicaid programs. Medicare, which covers the elderly and disabled, has consistently covered about a third of the nation's cancer costs. Medicaid accounts for only 3 percent.

The U.S. population is aging, and older people tend to get cancer at higher rates, Tangka noted.

Better and more advanced treatments mean more people with cancer are remaining alive, so the spending increases represent money well spent, said Kenneth Thorpe, a health policy researcher at Emory University who has focused on the cost of health care.

"It seems like we're buying increases in survival," Thorpe said.

The study is being published in Cancer, a medical journal of the American Cancer Society.

The researchers also found:

_The percentage of cancer costs from inpatient hospital care fell from 64 percent to about 27 percent. A shift to less expensive outpatient care, along with cost containment efforts by large health insurers, helped keep down increases in the costs per patient, the authors said.

_The proportion of cancer costs paid by private insurance rose from 42 to 50 percent.

_The proportion of costs paid out of pocket by patients — including copayments and deductibles — dropped from 17 percent to 8 percent.

Those last two findings surprised some experts.

Recent government reports have found that the percentage of Americans with private health insurance has been shrinking and recently hit its lowest mark in 50 years. Yet the study found that the proportion of cancer treatment costs paid by private insurance rose.

And companies have been tightening or cutting employee benefits, causing out-of-pocket costs to go up for many patients. Yet the study found that the proportion of bills paid by patients declined.

That last finding in particular was striking, said Lichtenfeld, the cancer society's deputy chief medical officer.

He alluded to widely reported increases in personal bankruptcies prompted by medical bills. "There's no question that the out-of-pocket costs for some patients have risen dramatically," Lichtenfeld said.

The rising price of certain treatments also should be acknowledged, he said.

The challenge of rising prices was recognized by American Society of Clinical Oncology (ASCO), which last year released its first guidelines counseling cancer doctors on how to talk to patients about deciding between less expensive chemotherapy drugs made more sense than newer, more expensive products.

The study did not add in the cost of diagnostic tests and scans, which are cost drivers. And the data does not include the last five years, which saw some extremely pricey cancer drugs come on the market.

The picture may have changed since the study's data was collected and the U.S. economy deteriorated, said Dr. Neal Meropol, a Case Western Reserve University cancer expert who worked on the ASCO guidelines.

Newer treatments along with wider testing are driving up the overall cost of cancer care, Meropol said.

"My concern is that costs are getting shifted to patients and there is a potential for increasing disparities" in cancer care, he added.

Still, no focus in prevention.