Chronic Condition: Medicare's Oversight Gaps

Gilbert M. Gaul
Washington Post staff writer
Tuesday, July 26, 2005 1:00 PM

The Post's series "Chronic Condition: Medicare's Oversight Gaps" highlights a range of problems with Medicare, including higher rates of infection and unnecessary medical procedures, which lead to billions in wasteful spending and a structure which reimburses more for additional procedures, in effect rewarding hospitals with bad practices. Poor oversight and regulation also allow for continued accreditation of hospitals with less than stellar records. Why is the Medicare system so poorly enforced? How does the flow of money within the system affect patient care for those covered under Medicare?

Washington Post staff writer Gilbert M. Gaul was online Tuesday, July 26, at 1 p.m. ET to discuss his series this week on problems with Medicare, including wasteful spending, oversight gaps and secretive contractors.

Read more from the series: Bad Practices Net Hospitals More Money.

Accreditors Blamed for Overlooking Problems.

Once Health Regulators, Now Partners.

A transcript follows.


Chicago, Ill.: Assuming it is true that Medicare pays for poor medical practices that result in rehospitalization, remedial treatments, etc., is it not also true that private insurance companies follow the same practices? The Post article implies that only Medicare is so unresponsive to poor quality of care. That is untrue and such an implication is unfair. You should report the whole truth not just part of it.

Selwyn Becker, Prof Emeritus of Psychology

Univ. of Chicago

Gilbert M. Gaul: We wrote in day one of the series that Medicare is a window into the way medicine is delivered across the nation, including other insurers. Very few people would contend that the same kind of problems we see with Medicare's payment system aren't present in other payment systems. In fact, many private insurers are waiting for Medicare to act so they can follow suit


Virginia: Medicare runs a 24/7 call center and Web site yet I seem to have difficulty getting consistent and accurate answers to my questions. Has anyone looked at the spending/efficiency with respect to the telephone/Web customer service. It seems very expensive to run without providing much results.

Gilbert M. Gaul: There was a GAO or HHS OIG study I think in 2001 that looked at exactly this issue and found problems with the response rates across the various Medicare Web sites. I didn't track that closely so I can't say if the problem has been fixed. But it sounds what you say that it hasn't.


Chicago, Ill.: Have you ever investigated the incredible waste in the DME program paid for by Medicare? Power wheelchairs must be prescribed for patients that meet ridged requirements set up by DMERC. When a family physician determines a patient doesn't qualify the DME company will find a doctor that will rubber stamp any prescription they need to get the patient to qualify. Many patients see these doctors only once then go back to their regular family doctor who wouldn't prescribe the wheelchair in the first place. How can Medicare auditors not pick up on this obvious abuse. Another very abused DME program is the diabetic shoe program. Again the requirements are rigid and is targeted for at risk diabetics. Unscrupulous DME companies have been giving out thousands of shoes to diabetics that don't qualify .These DME companies hire sales people that work on percentage of what they refer to as sales - a direct conflict with the Starke Laws. These sales people go to senior citizen buildings ,nursing homes etc. and tell people if your diabetic your entitled to a free pair of shoes. The patients then give the salespeople who have no training in prescription shoe gear their vital information and the DME company faxes their prescription to the family physicians. The physicians who are so busy and who don't understand this program will often sign these documents without even examining the patient to determine if they qualify. Medicare specifically states in their requirements that(1) the doctor must have knowledge of therapeutic shoes which most doctors do not (2)the doctor must furnish a prescription-not the DME company furnishing a very deceptive camouflaged form that the physician doesn't even realize is a prescription. (3)The physician medical notes must indicate that the patient qualifies for the shoes and it is documented in the medical chart. How can it be documented if the doctor doesn't examine the patient? Please understand it is not the doctors' fault it is the DME companies taking advantage of the doctors ignorance about the program. If Medicare just followed its own rules and audited these companies correctly they could stop much of the abuse.

Gilbert M. Gaul: I didn't focus on fraud in Medicare but did collect a fair amount of material. The power wheelchair issue is interesting on a lot of levels, including that it wasn't the DMERC that found the problem, it was the local paper in Houston. A reporter wrote a long story about local vendor allegedly ripping off Medicare and I guess that caught the attention of folks at CMS and possibly on the Hill. Suddenly, there was a fraud investigation, after this had been going on for a while.

To me, the interesting question with DME and all of the other procedures is how much tracking and analysis Medicare does and doesn't do. I was continually told by CMS folks that they didn't track data that way. Well if they don't and their contractors don't, how can they expect to identify potential problems before they become huge, expensive issues?


Durango, Colo.: Gilbert,your articles imply that the Medicare program is deficient for not adhering to an adversarial, punishment-oriented regulatory system. But where is the evidence that such a model produces better quality in healthcare or any industry?

Gilbert M. Gaul: So you don't think Medicare should care about taking bad doctors and hospitals out of the system? Do you think a purely collaborative approach is going to address the outliers who not only provide bad care, but also injure or kill patients? Why does it have to be one or the other? Isn't there an appropriate role for both regulation and collaboration?


Kensington, Md.: Enjoyed your series, which I read with these two "grains of salt". 1. The hospital quality ratings given by Medicare and its accreditors are only as good as their yardsticks. Hospitals learn to "teach to the test", rewarding nurses to give aspirin right off the bat to all chest pain patients but ignoring problems that they know the testers cannot measure. My physician father used to say that the only way to accurately determine quality of care was to to hide spies under the doctor's desk.

2. The series implies that if double the rate of surgery for a given condition is found at a given hospital, there is something wrong there. Of course, the "problem", if there is one, is just as likely to be at the places where surgery is NOT being done. In the same vein, regarding spending per Medicare recipient, more spending does not mean wasteful spending any more than it would if it were shown that people in Florida spend twice as much for their cars. Most likely they are getting a better product.

Gilbert M. Gaul: I don't think the series implied that at all. I think it pointed out as Wennberg and many others have noted that there are widespread variations in care that sometimes appear to have nothing to do with whether a patient does better and more to do with issues of supply and individual physician practices patterns -- so called surgical signature. Wennberg and Fisher have made some fairly powerful arguments that in some cases the system provides too much care, which results in significant waste. That goes back in a way to your earlier observation about standards. Many patients assume there are hard and fast, evidence based standards for all care, when we know that there are many forms of care where the standards haven't been tested or proven. when you have uncertain science, you sometimes end up with uncertain results and variations.


Minnesota: How do you think Congress will finesse the current statutory formula that will lower doctors pay by 5% per year for the next seven years?

Gilbert M. Gaul: I'm parroting what I have heard here. It sounds to me that congress will scale back or reverse the proposed cutback in doctors fees. No idea if they will give docs a boost. I think they recognize they can't make that hefty a cut. It probably isn't fair they probably couldn't survive the political fallout. But again, I'm no expert on this.


Baltimore, Md.: You make is sound as if the QIO transition from the "regulatory" role to the "partnering" role was something mandated or dreamed up by Medicare. In fact, the entire health care quality movement was already heading in this direction and Medicare was slow in moving in this direction. Additionally other regulatory agencies, e.g. OSHA, was re-engineering its regulatory approach to a more cooperative, improvement approach. Why didn't you include this information in your article to provide a more balanced view about why the transition occurred?

Gilbert M. Gaul: The way I recall the history, the head of Medicare and one of its top quality docs announced around 1992 they they were making this shift toward collaboration. I've followed medicine pretty closely for nearly a quarter-century and I'm not sure it's fair to say that Medicare was late to the game. I think they were part of the movement..........


Washington, D.C.: Mr. Gaul: Why are you picking on the quality improvement organizations? Aren't their executives entitled to make a decent living? After all, it's not like they're manufacturing war machines. They're trying to improve everyone's health care.

Gilbert M. Gaul: Not picking on QIOs at all. They're funded with tax dollars and play an important role. What's pretty surprising is how little coverage they have received -- ever! They also happen to be interesting businesses and that's worth reporting on as well.


Rockville, Md.: It would be helpful if CMS would open up it records to legitimate investigation for research purposes. Just as your article on QIOs pointed out, it is the total lack of transparency (as is popular to say these days), that these things go on, no one is accountable and the taxpayer is left holding the bag.

Gilbert M. Gaul: You make a very interesting observation. The folks at Medicare talk a lot about making the agency's operations transparent. My experience over 14 months was that the agency was very difficult to deal with, refused to provide even basic information, such as budgets and FTEs, let alone detailed data on spending trends, performance audits and internal reports. I was forced to use the freedom of information act for incredibly simple things. Even then, the agency stonewalled me. I have several requests still outstanding 15-17 months later -- for performance reports of a few QIOs. Now why is it so difficult to photocopy those or send them on a CD?


Washington, D.C.: Isn't it true that much of the QIO 'confidentiality' issues are actually required by law? And haven't Medicare actuaries looked at some of the QIO work and found that quality and cost effectiveness improved?

Gilbert M. Gaul: As the story noted, much of the confidentiality issue comes directly from Medicare regulations that even Medicare officials say may be seriously outdated. My impression is they're hoping the IOM will take the issue up in an ongoing study, due sometime in 2006. I have no idea if Medicare actuaries have looked at QIOs spending and found them to be effective -- for a very good reason. Medicare refuses to share that information with me! If you have it, please put it in an envelope and send it to me care of the Washington post.


Baltimore, Md.: You are correct in your recollection. But the announcement was made in response to either an IOM, IG, or GAO report that concluded that the "bad apple" approach to health care quality was not working and that the health care industry was already going in the direction of quality improvement. The report recommended at CMS (HCFA at the time) should follow suit. Again as one of the first questioners indicated, there are no data to support that the bad apple approach, applied nationally, works. In fact, many studies conclude that litigation is the best approach for instances of "bad apples".

Gilbert M. Gaul: That's right. The IOM report was in 1990 and it did recommend a more collaborative approach. Medicare then made its announcement.

Re: you're other observation, I'm not saying collaboration is a bad thing. But I think there's plenty of evidence (read the state surveyor inspection reports)that collaboration doesn't catch lots of problems. In fact, it has missed scores of truly egregious cases in which patients have been killed or injured. why are these approaches mutually exclusive?


Rockville, Md.: Thanks for the eye-opening articles. It's appalling that Medicare and other insurers actually financially reward docs and hospitals for bad care. With all the hand wringing in Washington over future budget deficits, how is it possible that we have allowed Medicare's upside down system to go on for forty years?

Gilbert M. Gaul: Medicare was a political compromise. In order to get it passed, the framers had to embrace the existing payment system, which essentially paid hospitals and doctors what they said it cost them to provide care. Congress has tried to address the spending issue over the years, with some limited success. But, in effect, Congress also serves as the board of directors of Medicare and has a lengthy history of adding new services and blocking reforms. Providers and patients also form a powerful lobby


Bethesda, Md.: Since there are up to 100,000 deadly medical errors a year, it seems that some reform is in order. To correct them, however, most people believe that a "no fault" reporting system is better.

Another cause for bad outcomes is the "off-label" use of drugs, which also is very costly. More regulation is needed in this area.

Gilbert M. Gaul: not sure if it should be no fault or not. that's what all of the researchers say. But there is an element of an echo chamber there. One of the things I was surprised by in my research was how small the patient's voice was/is in medicine. patients are the end users yet they often are almost an afterthought in these discussions of patient safety. I once asked one of the nation's experts on patients where are the patients in patent safety? His response after a long pause went something like, That is such a profound question, I can't answer it.


Cherry Hill, N.J.: You have invested considerable time and effort in this series. What do you hope will be the outcome of your articles?

Gilbert M. Gaul: A reader from my home town!?

I can never predict outcomes. I have written many series over 30 years. Some I imagined would have a dramatic impact and went nowhere. Others I thought were more modest had huge impacts. It's unpredictable and out of my hands.

Without offering a purely personal opinion, which isn't allowed, I guess I'd hope that people recognize all of the work that went into this effort, that this is a big and important issues, that we probably all need and want Medicare to work -- and work better -- and that the folks who are in power will at least consider the issues we raises in a thoughtful manner.


Rockville, Md.: Please provide some information on the death rates in the end stage renal population. Where did you obtain the information? From the U.S. and from elsewhere? Were the death rates different for patients on hemodialysis versus peritoneal dialysis? Are the treatment modalities different in other countries?

Gilbert M. Gaul: I don't have that information sitting at this desk. Do me a favor and send me an e-mail at I will respond tomorrow when I am back in an office with all of those documents. Thanks for being patient.


Baltimore, Md.: Why are you surprised by the agency's stonewalling tactics? This is typical bureaucratic behavior. CMS implements the QIO program according to the laws passed by Congress. There are now professional organizations in each state with really nice high paying jobs. What are the odds that Congress is going to change the law that would allow high paying jobs to leave their districts/states? White collar welfare at its best!

Gilbert M. Gaul: Call me an innocent. But I would think a taxpayer financed agency involved in life and death issues that says it is trying to become more transparent would actually means what it says?


Rockville, Md.: Let's not forget the poor gentleman who just wanted to know what happened to his wife. The answer it turned out, was that the care was less than optimal. I feel sorry for the guy. Speaking of lobbying groups, where in the world is AARP?

Gilbert M. Gaul: Don't know.


Nashville, Tenn.: Mr. Gaul: First let me commend you on an outstanding series of articles. Hopefully your work will raise awareness on what I would argue is the most important domestic issue.

My question concerns the third article in the series regarding the mission of the QIOs. Isn't a collaborative approach important for promoting error reporting by physicians? Doctors have a fear of poor outcomes being misinterpreted as negligence and perhaps this is why the paradigm shifted from regulation to collaboration.

Gilbert M. Gaul: My question would be how do you balance the patient's rights in a truly anonymous reporting system? Are you going to tell the patient he/she has been injured? Are you going to compensate them in some way? Where do the patients fit into your equation?


Boston, Mass.: Excellent reports! I wonder whether you feel the QIO program deserves any credit for opening up the measurement and eventual public reporting of quality of care information to the public? There would be no understanding of health care disparities without it, no provider specific performance exposure in hospitals, nursing homes, or home health agencies. Let's give a little credit where credit is due, now.

Gilbert M. Gaul: You're losing me. Wennberg et have been reporting on disparities for decades without help from the QIOs. It's also worth noting that a number of states, including NY and PA. have been collecting and publishing outcomes and process measures for years and years, again without the QIOs. That's not to take anything away from the QIOs. sure they help collect data for Medicare, for which they are paid.


Las Vegas, Nev.: I am a QIO analyst, recently back to the program after 10 years in the commercial sector.

The Byzantine, perverse thicket of contradictory regulations and financial incentives that comprise U.S. health care in general and Medicare in particular are neither of the QIOs' making nor under their control. Those who do QIO work overwhelmingly do so out of the most noble of motives -- to improve the quality of health care and the safety of patients. The aggregate cost of the QIO program is microscopic relative to overt Medicare fraud and waste. Were CMS to even marginally tighten up on the fraud and REQUIRE that providers accepting Medicare payments participate fully in QIO initiatives, the QIO expenditure would more likely come to be viewed as the bargain it is.

Gilbert M. Gaul: I think the last sentence of your message has a lot of merit. Can comment on whether QIO employees are noble or not.


Washington, D.C.: The Post has devoted an impressive amount of its last three editions to your story. Are there plans to devote a similar amount of research, effort and space to the underlying story--the fact that health care quality itself is so poor? Studies have shown that a patient's chance to get the right treatment is essentially equivalent to a coin toss.

Gilbert M. Gaul: good question for our editors. it is a huge issue.


Arlington, Va.: On yesterday's story about the fellow with the allegations about his heart surgery, one thing struck me: his cardiologist was a chain smoker! What kind of person picks a chain-smoking heart doctor? Next thing you'll tell me is that his priest appears in porn movies.

Gilbert M. Gaul: funny. one of the whistle blowers in the Redding case was a priest.


Florida: Gil, What a wonderful and courageous expose you have written on the truth vs. fiction of healthcare practices, delivery, and non-regulation. It is time the media, who are the only potential guardians of the public interests, ring the alarm bell re: the healthcare industry's deadly cover-up of harmful practices that kill 195,000 innocent patients yearly. Thank you for informing the public about the medical/healthcare industry's concerted efforts to endorse a culture and model of "no regulation" and "blame-free" medicine, which only increases medical errors and substandard care and puts patients at further risk for harm. The medical industry is the only profession in our society that has been given the right to receive reimbursement regardless of whether their services heal you or kill you and to have no consequences for their actions when they harm you, and it is past time to remove these incentives for harmful healthcare services. As a medical professional, my hat is off to you.....

Gilbert M. Gaul: thanks


Boston, Mass.: Wennberg began and has never veered from reporting outcomes from claims data. The QIO program initiated development of and reporting of process of care measures which can only be gotten from medical record abstraction, begun in early 1990's after initial public reporting of mortality in 17 conditions for all hospitals in the country. Only after that groundbreaking work did PA and NY and Dartmouth's New England Cardiovascular Study Group initiate their own reporting endeavors, frankly as a defensive move to counter a Medicare biased view of their total patient care. None of this would have come about had it not been for visionaries at HCFA in late 1980's.

Gilbert M. Gaul: how have those process of care measures charted by the QIOs affected patient care in the last decade? Have they eliminated variations in a broad way? Just curious. I think everyone agrees collecting publishing these kinds of measures are a good thing, and a starting point toward designing a system that rewards quality and maybe even penalizes bad care.


Atlantic City, Md.: Have you looked into the problem from the other end of the spectrum, how Medicare rules designed to save money are squeezing legitimate healthcare practices, particularly in rehab hospitals, where it has become almost impossible to get admitted after cardiac or orthopedic surgery?

Gilbert M. Gaul: No, but I am aware of these and many similar complaints. It's been my experience that providers always believe they are being squeezed -- and sometimes they are. If you design a functional system, perhaps some of the savings can be used to pay for legitimate rehab care?


Bethesda, Md.: I agree there is waste in Medicare spending. As far as your comment about doctors making more on substandard care this is not true for surgeons. After a procedure there is never any payment for follow up care up do 90 days during the global period. Even in a complicated procedure the first three are paid in reduced rates then no more. In addition the reimbursement rate is about 30 % what other insurers pay.

Gilbert M. Gaul: For surgeons, that's true. The conceptual issue there would be why pay all surgeons alike. Aren't there good surgeons, mediocre surgeons, and fabulous surgeons? An efficient payment system would recognize those differences and pay at least some portion accordingly --- at least that's the argument.


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