Michael Geruso
Appearances
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
Yeah, that is the hard part. The hard part is for the government to know how sick somebody is. The doctor may know it, the patient may know their own health conditions, but for the government to know it, they need to see it in their records. And so, like Tim outlined, there's two parts of Medicare.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
People can choose the public option or people can choose to enroll in a private plan like UnitedHealthcare, Humana, a plan that wouldn't look very different from yours or mine. In the public program, the government pays the bills. So it knows that on average, say, a person who's coded with diabetes costs $2,000 more each year than a person who doesn't have diabetes in their records.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
So from that data, from the public system, the regulator can say, okay, Medicare Advantage plans. If you take on a patient who has diabetes, we'll give you an extra $2,000 per year to take care of that patient. We'll reimburse you what we know that it costs in the public system to take care of that patient.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
And we'll do that for 100 different condition categories that correspond to these chronic conditions that we know persist from year to year and we know are expensive to treat. And their goal in doing that is that they calibrate it just right so that no insurer anywhere has any incentive to avoid sick patients.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
If they bring in a healthy patient to their plan, they're going to make the same profit as if they bring in a sick patient to their plan. So that's the goal. But a lot hinges on that calibration. And the way that calibration works is in these diagnosis codes that are submitted to insurers and submitted to the government on the claims that doctors send out in order to get paid.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
Sure. So a diagnosis code is going to be an alphanumeric code. It's going to say, this patient has this condition. And so there might be several different codes that correspond to a diagnosis of diabetes. Maybe the diabetes has some eye complications. Maybe it doesn't. And then what the regulator will do is sort of aggregate the information from those codes that are going to be
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
entered on this bill that the provider sends to the government or sends to the plan that's paying him, that your doctor sends this bill out. And that information is aggregated and is aggregated up to sort of higher levels of chronic conditions.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
So there might be a hundred different codes that correspond to some version of congestive heart disease, but those will all get lumped together in heart disease.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
The first thing to understand that if Tim is submitting this claim to the federal government, that's it. Nothing else happens. Everything else that I'm gonna say, it would be only occurring if Tim is submitting this claim to a private insurer.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
So if patient Derek is insured with UnitedHealthcare's Medicare Advantage plan or CVS's Medicare Advantage plan, a whole different set of things is gonna happen now.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
I'm the insurer, I received this claim, and we take a look at it, and we think, huh, there aren't any diagnosis codes here, despite the fact that last year, you know, Derek was coded with prediabetes, and it looks like Tim's been prescribing medications for heart disease. Luckily, it looks like we have an arrangement with Tim's practice.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
We have an arrangement with them where we can collect all of their notes and electronic health records. So we'll get those. We'll have them send them to us. And we'll look over those. We'll send them to our coding teams and we'll see what they can find. All right, some time passes. We've had our teams look over the notes. Maybe AI has crawled through it. And that has turned up the word diabetes.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
We see that the patient is on a GLP-1 maybe. The diagnosis for diabetes is substantiated enough in the notes that we can go ahead and code that as diabetes and submit that to Medicare. And actually, now that we're looking at this patient record, we see that the patient was exhibiting some signs of memory loss.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
Maybe there's not enough information there to yet code dementia, but here's what we can do. We can call up the patient and we can ask if the patient's willing to have a nurse come to you, Derek, if you're willing to have a nurse come to your home. And maybe that sounds like a hassle for you. So maybe what we'll do is we'll, we'll, we really want to get this health risk assessment done.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
We'll send you a gift card for 50 bucks. Yeah. to incentivize you. So we'll send a nurse out to your home. He or she could do a test. Maybe they'll find enough information to document a diagnosis of dementia, right? And so now we'll get those codes onto the payment system and we'll be reimbursed for that. We'll have that logged in the system with the Medicare administration.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
And actually, as we're looking at these records, we see that, Derek, you had a diagnosis of skin cancer five years ago. Yes, yes, I know the skin cancer is in remission. No one is treating you for skin cancer right now. You're not taking any medications. You're not seeing any cancer doctors. But we think according to the rules, we can still keep the skin cancer diagnosis on your record.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
I mean, our goal as insurers is to make things as complete and accurate as possible. So we're going to get that diagnosis on your record as well and get reimbursed for that.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
Yeah, so we can talk about our paper. I'll also say that there's just many people that have researched this. The Health and Human Services Office of Inspector General. There's Independent Medicare Payment Advisory Commission. Everyone sees this happening and they get at it different ways.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
So, for example, this story we told about the insurer scraping through medical records, maybe with humans, maybe with AI, that's something that the Office of Inspector General of HHS has investigated and found that that's a significant portion of where the payments and codes come from, is this scraping through medical records. Maybe the doctor doesn't even know that it's happening.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
Maybe the information about diagnoses never even get back to the patient. So it can be pretty disconnected from any sort of treatment plan or even knowledge of the doctor or the patient.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
But in our paper, what we did was we took a couple of approaches, but the easiest one, the most transparent one to explain was we looked at data from people in Massachusetts where there's tremendous database that allows you to see all the healthcare claims of everybody in Massachusetts. And we would see the healthcare claims of these people when they're 62, 63, 64.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
And from those healthcare claims, we could construct their risk score. We knew whether they had diabetes in the claims. We knew whether they had cancer in the claims. We knew whether they were coded for dementia or depressive disorder. And then we followed two sets of people. We followed the people who turned 65 and joined a private Medicare Advantage plan.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
And we followed the people who turned 65 and joined the public fee-for-service system. And as you follow the people that joined the public fee-for-service system, Their conditions, their risk scores, whether they're coded with any chronic illness at all, basically is flat from 64 to when they turn 65 and 66 and so on.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
For the people that join MA, the moment that they become eligible for Medicare and join MA, their chronic conditions that are coded in their records immediately jump up. And by two, two and a half years after they've been in Medicare Advantage, their risk scores are 10% higher than the trend. And so people join traditional Medicare, no change in the risk score.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
People join Medicare Advantage, huge bump up in their risk score. And, you know, one possibility you could say here is, oh, well, these people are just, the people who are joining Medicare Advantage are just getting sicker somehow. There's something systematically going on. They're getting, they truly are sicker. But there's just no way that's happening.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
A 10% increase in the risk score is what you'd get if within a population, one out of 10 people became paraplegic. A 10% increase in the risk score is what would happen if 60% of the population became morbidly obese. There's just no way that the whole population is changing their health status that quickly.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
Yeah, that's a great question. And I think Tim and I maybe think about this a bit differently, at least I do, than the regulator. So there's just a complete continuum here between, on the one hand, getting a diagnosis coded that the patient clearly has, no one would doubt, and on the other hand, inventing something from whole cloth. And probably the most important thing to understand is that
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
no matter how the additional codes get on there, the taxpayer is on the hook. And so we're paying more regardless of what is happening is legally classified as fraud or is legally permitted by the system. And the difference between those two things is just a difference of what the regulator chooses.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
If today the regulator says, you can do these chart reviews, you can send the patient's electronic health records to your coders at UnitedHealthcare, to your AI systems, you can scrape the records, you can find the diagnoses, and we'll pay you for those. If tomorrow they said, you can't do that, and the insurer still did it, then that would be fraud.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
So what's fraud and what's legal is sort of the wrong question to ask here. The waste is happening either way.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
Yeah, there might have been a time not that long ago when it was the insurers that were putting the software onto the doctors' tablets to make sure that they were coding everything that could be coded.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
But now, because the insurers are just making these contracts with the physician practices so that the physicians get a bounty every time they add another code, the doctors themselves have the incentive to find these codes, to buy software products, to change their practices so that they log every eligible code. I don't usually ascribe moral blame to software.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
So I don't think that the software itself is the blame.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
So it's going to vary a lot by practices, but in a practice where the doctors are just contracting with the insurer and contracting on this risk basis, that could be a big fraction of the pie, more than half. In systems where the doctor and the insurer are the same entity, like Kaiser in California, then there's actually no difference between the insurer's software and the doctor's software.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
But I think that the biggest chunk overall over the whole healthcare system in Medicare Advantage is coming from the insurer's chart review, not what's happening at the doctor's office. That might change over time as these contracts change, as the software becomes more nimble. But for now, or at least looking backwards, it's mostly been at the level of the insurer.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
Yeah, there are a few things that we could contemplate doing. Let me first say, it's exactly right that there just is going to be somebody who loses something if we pare back $50 billion from Medicare Advantage plans. Some of that's the money that's going to the insurers, some of the money that's passing through to doctors, hospitals, and so forth.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
And part of the money is passing through to the seniors themselves. If we're generously reimbursing these plans and then we dial back that spigot and cut off some of that money, some of that is going to be borne by the seniors in these plans. Maybe there aren't as many plans as available. Maybe their co-pays go up by a little bit. So you can see why this is politically difficult.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
But if you wanted to reduce these payments to plans, to try to level the playing field so that you, me, Tim, all the taxpayers pay the same, whether someone chooses traditional fee-for-service system or chooses Medicare Advantage, there's really not...
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
a technical problem in figuring out how to do that we know how to do that already cms deflates the payments to ma plans by a small amount because they know that that these plans code more intensely but that that deflation has ever been more than six percent and you know our research which is 10 years ago now says that plans were upcoding at that point uh by at least 10 percent and more recent estimates put that number at like
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
15 to 20% total overpayments to MA plans. So that's from the independent, nonpartisan Medicare Payment Advisory Commission. And so if you think that the, you know, someone might think that the overpayments are 15%, someone might think that they're 10%. Someone might think that they're 20%, but they're not 6%.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
And so the first thing you could do is just double the coding and deflation factor that we deflate these planned payments by. That's not a perfect solution because there are some plans, the big plans, do a much better job, much more effective at pumping up the risk scores, and that'll hurt small plans more.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
But if I had to choose between doing nothing and just ratcheting down the payments of these plans, because everybody in the industry, all the experts, the independent watchdogs, we all know that we're overpaying these plans, I would choose to ratchet those payments down. So there are other things we can do too. There's really lots of things we can do and you could have a more nuanced approach.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
We talked about this chart review earlier where it's the insurer, not the doctor that's adding the codes. We talked about dispatching a home health visit. These are things that CMS, the regulator, could just disallow.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
They could say, you could do these home health visits, but if you find a diagnosis code just from one of these home health visits, where we know that you're not really following up with any health care for the patient, we're not going to allow that to be included in what constitutes the risk or what constitutes the diagnosis that you're being paid for. So
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
You could rein back in the practices that we know are generating all these additional codes that don't really have any connection to patient care, that don't really have any connection to what the doctor is doing.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
My advice is that if we're interested in cutting costs in Medicare, absolutely go after the fraud. But let's not pretend that the fraud is where the real money is. Prosecute the fraud. That's flashy. It sounds like a win-win. But the real money is in the way that we legally allow these plans to inflate their payments. You know, we've got...
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
Maybe $50 billion a year in overpayments to these plans that they legally extract. Most federal agencies have much smaller budgets than $1 billion a year. The EPA is $10 billion a year total budget. You could fit five EPAs into the overpayment that we make to MA plans. USAID was taken down recently. I'm not sure what the status of that is as of today.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
But the entire budget that USAID controls is less than $50 billion. That fits in to the overage that we pay MA plans. And fixing that is not something that's going to be done overnight. It's an administrative process. You need to change the rules of the game. And that rulemaking process means that you propose rules. You let consumers, seniors, insurers, doctors weigh in on the rules.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
That's going to play out over time if anyone chooses to do it. But you sort of need to go through that process to have something durable that's going to stand up in court when the big health insurers decide that they don't like the new rules, for example.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
And so, you know, my advice is, and I don't know if anyone's listening, but my advice is do this carefully, do it in a way that's durable, and don't do it a way that's merely flashy and will immediately get overturned in court with no durable change.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
The one thing I want to take away from this episode is this concept of trade-offs. This idea that in the most complicated government programs,
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
As Musk himself recently tweeted, quote, we spent the weekend feeding USAID into the wood chipper. There is irony here and there is tragedy.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
It's illegal and undemocratic, he said.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
What would Derek's doge begin to look for in savings? I'd start like this.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
But most importantly, We talk about trade-offs.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
Well, if you're looking to cut government spending, the three biggest buckets that there are are health care, social security, and defense. Together, those three are about 60% of the federal budget. And of those three, health care is the biggest part. About one out of every $4 the federal government spends is on health care, either in Medicare or Medicaid. Those are the two biggest components.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
Medicare, the program for the elderly. Medicaid, the program for lower income Americans. And the rest of what the government spends has to fit into what's left over. Medicare alone is about $900 billion a year, so almost a trillion dollars in Medicare. And so in a program that big, even finding 1% of fat to cut is $10 billion, right? Most of federal agencies have budgets far below $10 billion.
Plain English with Derek Thompson
The Trump-Musk Doctrine: F-ck Around and Find Out
And so even a small slice of that very big base, you could imagine finding some real savings in.