The healthcare reform ad wars continue to heat up, with the estimated total spending for the past six months hitting $57 million.

In my last two columns I wrote about both the pro-reform campaigns (Pro-Healthcare Reform Ads Suffering an 'Identical Crisis') and the anti-reform campaigns (Scare Tactics the Standard for Anti-Healthcare Reform Ads).

I thought the anti-reform ads were dramatic and attention-grabbing, but also filled with half truths, outright lies, and scare tactics. (For example, one online ad claimed that in Massachusetts, if you don't have the right healthcare insurance, you could go to jail.)

The pro-reform ads, on the other hand, were so middle-of-the road and so closely followed the Obama administration script that they all ended up looking and sounding exactly alike. The anti-reform ads were rocky road; the pro-reform ads were vanilla.

And which ones do you think worked best? Well, this week the Obama administration starting backing off on the public insurance option. And the end-of-life debate, which was wildly mischaracterized by the anti-reform group, is now off the table. And that's not all: The majority of Americans now oppose healthcare reform, up from 45% in late June.

Now, I'm not saying that the anti-reform ads are completely responsible for these changes. But of the readers who weighed in on the topic on the HealthLeaders Media Web site and on the MarketShare blog, most agreed that ads that feature scare tactics, dramatics, and half truths work.

Take this comment from Stephen Texeira:

Scare tactics are, unfortunately, usually quite effective, particularly for Americans, and particularly when we think we might be losing something. These ads are not simply misleading, they are complete fabrications—well not complete, there is state called Massachusetts.

Because healthcare is a personal choice that affects all of us and our families, anything that scares us ultimately works.

The reality is, however, that healthcare reform is a complex and detailed issue, to which few of us are willing to devote enough time to understand it. And that's precisely what these ads play on: ignorance of the issues, ignorance of the facts. While I don't love ads that stretch the truth or omit facts to get their point across in a clear debate, they are usually seen through.

But when the stakes are high, issue is complicated, the ads are obviously lies, and the goal is to take advantage of ignorance, the ads have gone too far.

So, yes, these ads scare me as well, but for a different reason.

Chris Bevolo also weighed in, saying it's not just scary ads that are to blame for misconceptions about healthcare reform:

. . . This stuff drives me nuts. There are real problems with our healthcare system, and real ways to address it. No matter which side of the political aisle people are on, we should be having real conversations about the real choices we face. Instead, we're flooded with all this BS in the form of scare-oriented advertising from special interests.

Even worse, in my opinion, is the "mainstream" media, who can't seem to dig deep on this topic at all, and thus play on the surface level (forget about the talking head rants and sensationalism that fill the 24x7 news cycle).

Finally, politicians themselves who can't have honest discussions and resort to ridiculous claims about proposals and their own scare tactics. (See last week's Jon Stewart bit called "Healthraiser" for a humorous take on this.)

What's sad is that this type of stuff works, all too well. I see friends who I respect as smart, conscientious people voting "no" to the Facebook quiz "Are you in favor of a government run healthcare system?", when in fact no one is discussing such a thing. Scare tactics work, and that sucks.

Christine Ricci said that both kinds of ads can work, but questions whether they would really sway healthcare reform decisions.

Ads that have a high emotional impact tend to work well, so for individuals that make decisions based on emotions, this style of advertisement will make an impact. On the other hand, this is such a data-rich issue that the ads may perform better if they tie in data with the emotional advertising. A bigger concern is the extensive cost and resources it takes to develop ads like these. Given the tough economic times, perhaps those funds could be better allocated. People pretty much know where they stand on the issue, so I'm not sure advertisements will influence that too much.

Another reader, James, said he's looking for real debate—not rhetoric (and wouldn't that be a refreshing change in politics).

Unfortunately, there are far too many scare tactics being used and not nearly enough facts. I even searched news sites to try and get the facts instead of opinions, but very little is actually available. I hate to say that I think these ads are effective, but only because there isn't a control to compare them to. When no one really knows how this health care reform will affect them personally, they tend to buy into these types of ads. I am not a fan of scare tactics. I would much rather see the two sides discuss the issue so I can see the pros and cons and make up my own mind. That said, it has been shown that these ads do work.

On the microblogging site Twitter, the short answers to my questions about healthcare reform ads included the following:

• @1samadams said true healthcare reform “has become a casualty of political bickering and power plays."
• @trishatorrey agreed, adding that anti-reformers were using “gullible people to spread disinformation."

Adams replied that he posits, in a 1,000 page bill that no one in government has read, "it's ALL disinformation."

No surprise that there were a sprinkling of comments about healthcare reform in general as opposed to the way both sides are communicating their message. Reading those comments makes it clear that that James' wish for meaningful debate is just about as likely as someone in Massachusetts getting arrested and thrown in jail for not having health insurance.

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On both sides of the political isle, there is agreement that our healthcare system needs meaningful reform to lower costs and expand coverage to the uninsured, and it needs to be done now. The key question is how to lower costs.

For the past four decades, a host of "managed" strategies have been deployed that include price controls (Medicare), controlling the doctor's pen (managed care), denying care (benefit design), and other restrictions, as well as wellness initiatives—all failing to reduce healthcare cost increases, which have risen at three times the consumer price index.

Democratic leadership released legislation that builds on these failed practices. Why have they failed? It's because they have not addressed the underlying reason for our escalating utilization of healthcare services—consumer behavior.

A significant disconnect exists in our current framework that disenfranchises the individual from the financial ramifications of their day-to-day lifestyle and health-related decisions. One hundred fifty million people get their health insurance from their employer, their rates set on a group basis. Eighty million get their coverage from the federal government through Medicare and Medicaid, again community rated. Where is the financial incentive for individuals to embrace personal responsibility for their health status and reward the right behavior when third-party payers are paying the tab, and pricing is set on an aggregate basis?

Add to this the rich benefits offered by employers fueled by its tax advantages—i.e., employer-provided health insurance is not taxed, so every $1 offered in benefits is worth $1.50 to the employer—and you have a formula that has caused the employee to be removed and disengaged from the actual cost of providing their care.

These perverse mechanics have driven the alarming acceleration of risk factors well documented to be behind our cost problems: Obesity, chronic conditions (diabetes, congestive heart failure, cancer, COPD, and asthma), poor diet, and sedentary lifestyles.

This setup is analogous to charging all drivers the same auto insurance premium regardless of whether they had a perfect driving record, or had a history of accidents and speeding. What effect would it have on driver's habits if they knew their driving record had no impact on their premium? Yes, a collective shudder at the thought.

The same holds true in financial services, where one's credit score, their track record of paying debts, is relied on to make decisions on one's creditworthiness. What happens? Many monitor their scores to ensure the most favorable financing rates.

In other businesses, consumers consistently demonstrate that financial rewards are the most effective at influencing their behavior. As examples, we now pump our own gas to save 3 or 4 cents a gallon, shop at big box home improvement stores to do it ourselves, and push a cart around warehouses to buy mutant sizes of goods with the goal of savings. In healthcare now, the consumer's pocketbook is not part of the equation, and that must change. Fundamental reform must start with six corrections in order to lower costs by creating a truly retail healthcare marketplace that brings transparency, choice, and portability:

1. Taxing of Employer Health Insurance. Right now, employers are burdened with selecting a health plan or plans that fit all of their employees—an impossible task the larger the number of employees covered. More importantly, the employer health insurance tax deduction is the largest tax entitlement, worth $1.5 trillion over 10 years, and would not only pay for the expansion of coverage to the 46 million uninsured, but also produces a $500 billion surplus to pay for needed subsidies outlined below. Consumer coverage would then not be affected by job change or loss, bringing much needed portability peace of mind.

2. Mandate All Have Health Insurance. Everyone must have car insurance to protect against catastrophic injury and cost on our roads, and carry homeowners insurance to protect their home in order to obtain a mortgage—the same protective safeguards apply to themselves. Onerous existing regulations on benefit design need to be replaced with flexible approaches that allow consumers to choose the right coverage for their needs. Insurers must accept all applicants—no pre-existing condition exclusions.

3. Price and Quality Transparency. In what other industry do customers (and their surrogates, providers) order service without knowing the price or quality record other than healthcare? Legislation should ensure prices, and outcomes/quality results for all healthcare services and products are clearly communicated to consumers before or at the time of service enabling a cost benefit decision aligned with other efficient markets. Comparable transparency principles now being applied to protect consumers in financial services have relevance in healthcare.

4. Subsidies for Low-income Consumers. Direct the $500 billion surplus generated by taxing employer health benefits toward extending coverage to all qualifying individuals and families, with the goal of having all 300 million U.S. citizens covered.

5. Choice. Drive efficiency by giving consumers the ability to choose their preference—in health plans, providers (both physicians and hospitals), ancillary providers, retail clinics, and other healthcare menu items. The existing 1,300 health plans provide ample competition and options, there is no need for a federal sponsored public plan to "keep them honest." Empower consumers with information, and they have a demonstrated track record of "finding the cheese."

6. Standardize Health Information. Aren't we all tired of filling out those exhaustive health questionnaires when we see a doctor or apply for insurance? The technology has existed for years to make immediately available electronic medical records and the transference of data that would significantly enhance decision making by all healthcare constituencies (providers, consumers, health plans, etc.) and lead to better outcomes. This is an area that the federal government can and should facilitate—now.

Eighty-five is an important healthcare number. It is both the percent of Americans now covered by insurance (255 million), and the percent of each dollar, or more than $2 trillion annually, spent on care for patients. It's imperative we get reform right, to protect and ensure both these percentages move in the right direction.

Now is the time to enact legislation that creates a robust retail marketplace that properly aligns economics to facilitate the behavioral change critical to reducing healthcare costs.

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Rob Tazioli is a 25-year veteran of healthcare and has served as an executive and entrepreneur. He cofounded two business process outsourcing healthcare companies: Connextions and VIHMS, and was chief marketing officer at HealthNet and Matria Healthcare. He also led the mountain region for Prudential Healthcare.

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Five federal audits on behalf of Medicare found $12 million in erroneous claims filed by dialysis centers in West Virginia and Delaware, two hospitals in the Altoona Regional Health System in Pennsylvania, Blue Cross Blue Shield of Kansas and duplicate billings for the same Medicare patients.

The audits by the Office of Inspector General included recommendations that the money be repaid to the federal government and that the responsible agencies and providers make sure such mistakes are not repeated.

The case details are summarized as follows:

Blue Cross and Blue Shield of Kansas wrongfully billed the Center for Medicare and Medicaid Services $11.2 million for post-retirement benefits (PRB) for its employees, who worked to administer Medicare Part A and B operations. The contract was terminated Feb. 29, 2008.

According to the OIG, "Kansas's entire termination claim of $11,200,000 in PRB costs for the Medicare Part A and B contacts was unallowable" because it was calculated based on a retroactive change in accounting practice "without CMS approval. Therefore . . . none of the costs claimed were allowable."

According to the audit, BCBS Kansas sought reimbursement for future PRB benefits that it had not incurred prior to the contract's termination. The audit noted that under the contract, BCBS Kansas used accounting practices based on a "pay-as-you-go" method, so it was to be reimbursed only for actual paid claims.

The reason for the contract termination was not specified in the OIG's audit.

In a letter, BCBS of Kansas protested the OIG's findings, but "did not provide any additional information that would cause us to revise our finding or recommendation. We maintain that Kansas should withdraw the full claim amount."

According to a sample audit for the 27-month period between January 2006 and March 2008, the CMS overpaid $300,894 in 373 claims submitted twice for the same patient. Under Medicare rules, an individual may be enrolled in only one Medicare Advantage or PACE (Programs of All-Inclusive Care for the Elderly) for comprehensive medical and social services.

In fact, the OIG wrote, of the approximately 218 million in capitated payments totaling $158 billion made by CMS during that period, only these 373 payments were duplicate payments for one month of healthcare coverage. "Although CMS had correctly paid organizations for the vast majority of enrollees, the validation process that CMS used to ensure the accuracy of payments did not identify and prevent these improper payments," the OIG wrote.

CMS acting administrator Charlene Frizzera wrote in response that CMS agrees with the audit. Since November, 2008, "CMS has been formally "testing a new control as part of a monthly Beneficiary Payment Validation procedure to identify duplicate payments," she said. Frizzera added that for April 2009, a total of 70 beneficiaries were identified as having "questionable enrollments in multiple plans."

Two dialysis centers were also targeted by separate OIG audits for overbilling for administration of Epogen, an expensive drug to treat anemia that is common in patients with kidney disease, over the course of a 30-month period starting Jan. 1, 2004.

Fresenius Medical Care, First State, in New Castle, DE and Fresenius Medical Care, Beckley, WV overbilled Medicare $7,187 and $25,886 respectively for Epogen injections.

The OIG's audit said the amounts of Epogen that were billed did not match the units ordered by attending physicians, as reflected in medical records of the two facilities.

In dialysis, Epogen is a significant amount of Medicare reimbursement. For example, at the First State facility, $5,916,116 was provided in Medicare services during this time period, and of that, $1,719,455 was for the administration of Epogen, the OIG audit said.

Similarly, at the Beckley facility, $4,881,172 in Medicare services was provided from Jan. 1, 2004 through June 30, 2006, and of that, $1,698,935 was for Epogen.

Altoona Regional Health System's two hospitals, Altoona and Bon Secours in Altoona, PA, misstated salaries, workers' hours, service costs and wage-related benefits for a total amount of $1,114,822 for the 2005 fiscal year that ended Sept. 30, 2005.

"The errors occurred because the Hospital did not sufficiently review and reconcile its reported wage data to supporting documentation to ensure that the data were accurate, supportable, and in compliance with Medicare requirements," the OIG audit said. The audit suggested that CMS require reconciliation procedures to ensure that future cost reports are accurate and in compliance with Medicare rules.

However, it is unclear from the audit whether the OIG suggested that Altoona would have to pay the money back.

All 10 of the physician groups participating in the Centers for Medicare and Medicaid Services' Physician Group Practice (PGP) Demonstration achieved benchmark performance on at least 28 of the 32 measures reported in the third year of the pilot demonstration. As a result of their efforts to reduce the growth rate in Medicare expenditures, five of those physician groups are receiving performance payments totaling $25.3 million as part of their share of $32.3 million of savings generated for the Medicare Trust Funds for the year.

Over the first three years of the demonstration, the physician groups increased their quality scores an average of 10 percentage points on 10 diabetes measures, 11 points on 10 congestive heart failure measures, 6 points on seven coronary artery disease measures, 10 points on two cancer screening measures, and 1 percentage point on three hypertension measures.

Two of the groups—Geisinger Clinic, headquartered in Danville, PA, and Park Nicollet Health Services, headquartered in St. Louis Park, MN—achieved benchmark performance on all 32 performance measures.

The demonstration seeks to encourage coordination of Medicare Part A and Part B services, promote efficiency through investment and administrative structure and processes, and include electronic medical records and chronic disease management strategies, said Donald Fisher, PhD, president and CEO of the American Medical Group Association, in Alexandria, VA, which sponsored a teleconference yesterday with representatives of the 10 medical groups.

"The results of this demonstration clearly show that these types of organizations—which can be referred to as accountable care organizations—can significantly improve the cost and quality of care in America," Fisher said. "Better quality is less costly, and this demonstration definitely demonstrates that ACOs are a viable model, and any healthcare reform proposal should address reimbursement policy such that it promotes these types of organizations."

Fred Bloom, MD, assistant chief quality officer with Geisinger, said in the teleconference that Geisinger has focused on hard wiring reminders and alerts into the patients' electronic health records to "enhance the consistency and reliability"—particularly related to diabetes and coronary care.

"By participating in this project, we've been able to develop more efficient ways of consistently bringing quality and value to all of our patients by developing these systems of care that apply to everyone—and not just the Medicare beneficiaries, who are the focus of the demo project," he said. "We've show through this project that it is possible to improve quality and reduce costs in healthcare—which is very important for the current healthcare reform [movement]."

David Wessner, Park Nicollet Health Services' president and CEO, said that with its work on a chronic hear failure program operated during the CMS demonstration, they were able to save $6 for every invested dollar in the program.

"This is the type...of new patterns of care that is exciting but it is also what has to be accomplished if we're going to see true reform," Wessner said. "We have been able to pursue new patterns of care that really would be impossible to take on if it were not for the economic structure of this demonstration project."

Marshfield (WI) Clinic's President Karl Ulrich attributed its success in the demonstration to the use of electronic health records developed internally at the clinic. "We use the data warehouse that provides point-of-care decision-making by our physicians and other providers when they are seeing patients—whether that would be in the hospital, in the clinic or at home (in evening) while they are on call," he said.

"It's this decision support—looking at the situation such as drug-drug interactions or allergies that patients have . . . [making] sure we're doing all the appropriate tests on a person that allow for point-of-care decision support that we think is critical," Ulrich said. "That drives the quality outcomes here."