Thursday, December 22, 2016

Why Health Care Costs So Much in America.....

We were fortunate enough to spend last weekend in Boston, great town!  It was a combination business and pleasure trip, we always love to visit....truly, historically entertaining. "Chowdah", "Lawbsta", "Dewahs on the rawks".  We visited "Havad" and watched a bunch of Bostonians dressed as the Sons of Liberty throw fake crates of tea (tied to ropes....to keep the crates from floating away) into Boston Harbor, to the delight of other vacationing Ohioans, Minnesotans, Floridians and Iowans as we walked across the Congress Avenue Bridge.  We made a trip up to the the Old North Church, the birthplace of the Revolution. I have to admit that a little tear welled up in my eye as I read some of the plaques, describing the sacrifices that the colonists made; the midnight ride, "one if by land and two if by sea", the dying Major John Pitcairn being carried from the battlefield by his son, all to gain freedom and unchain all American's from the tyranny, over-taxed tea, social injustice and economic oppression by the crown. This little idea, the American Revolution, freedom and fundamental rights of life, liberty and pursuit of happiness took hold and fostered what is, in my opinion, the greatest, most vibrant, resilient economic engine on the planet.    

That said, after the visit I felt really motivated.  I was inspired by the greatness and enormity of what a band of rebellious, resourceful colonists could accomplish.

I need to take a deep breath here.

In this post I'd like to take on something equally as daunting as the tyranny of the British rule.....

I need to say a few choice words about medical billing.

The following will be framed in the context of a recent encounter I had with America's "Health Care Delivery System" (AHCDS).

But first, in my opinion,  here are a few of the indisputable facts re: the AHCDS.

1.)  The people involved in the delivery of health care in this country are (by far) the smartest, most capable, well trained, caring people on the planet.  (16 million jobs - Roughly 1/8th of the US Work Force) As a country, we are truly blessed.

2.) There is more "non-paper" capital deployed in the AHCDS than any other industry.  (AHCDS accounts for roughly $3 Trillion, or about one-sixth, of US GDP)

3.) There are more safeguards, value-added processes, educational requirements, testing, checks/balances and double-checks/balances than any other industry (with the possible exception of the Nuclear Regulatory Commission) I can think of.  Quality Control is unsurpassed.

4.) The technology and level of care provided (if you are insured) right up to the point where the patient is discharged and medical records are assembled and billed, is extraordinary. The standard of care is world class by any measure.

5.) Last, but unfortunately not least, The AHCDS billing mechanism simply doesn't work and must be metaphorically tossed over the side of the boat and into Boston Harbor.  We have to start over.

I've based Item 4.) above solely on the results, described below, from one (1) statistically irrelevant encounter, on 6/23/16 with a world renowned clinic located in Cleveland Ohio, reputed to be (and probably is) one of the finest health care enterprises in the world.  Based on the high level of silliness of this encounter, I have to believe that variations of the following events, described below, are repeated countless times every day all over the country, but nobody knows it's going on, or cares to expend the effort to understand it. It's a dirty little secret.  Unfortunately, it's just not "sexy" enough for anyone to dig into and write about.

On the other hand, as the proprietor of a globally followed financial blog, I feel it's my civic duty to deploy my sizable journalistic clout and shine my laser-like spotlight on this mess in a probably futile attempt to open America's eyes to this debacle, while hopefully, making the topic at least a little bit entertaining.  Finally, because of HIPPA rules, doctor/patient privilege and any other rules of privacy that I may or may not be aware of at this time, I'm not going to disclose the name of the organization or any of the folks involved in this odyssey.  The names, of course, have been changed to protect the aforementioned.

Note also that this post addresses medical billing.  That's it.  I'm not going to talk about myriad other issues like:

1.) Standard of Care
2.) Access/Financing
3.) Malpractice/Legal issues
4.) Defensive Medicine
5.) The Role of Health Insurance and Government.

Each of the above deserves a post of several volumes, but not here, not today.

AGAIN....JUST TO BE CLEAR....THIS IS ABOUT MEDICAL BILLING.

WARNING:  The following involves the description of gross, disturbing, disgusting medical procedures and body parts and generally "icky" treatments.  Reader discretion, as always, is advised.  No person under 18 years of age should read the following without parental consent.

OK.....Here we go.....

In early June this year I recalled that my annual checkup was long overdue.  I called my Insurance Company Health Care "Coach" to arrange for a physical exam, routine blood-work and a "wellness visit". The healthcare "Coach" let me know that wellness visits, physical exams/preventive care and blood-work were all covered at 100% under my policy  (I'm fortunate enough to have a "Cadillac insurance plan that makes health care administrators salivate, unlike so many Americans who are uninsured) and that my provider was "in network" so according to my "Coach" I should be all set.  I made an appointment to get checked out on 6/23/16.

I arrived at the doctor's office as scheduled, a nurse took my vitals and drew some blood. The doctor came in and went over my health history, asking me lots of questions, checking boxes and typing away like a mad man.  He was a great guy, great communicator and very thorough.  The whole thing took less than an hour (my guess), and the time I spent with the physician was about 15-20 minutes.  I remember that he even complained that based on the computer scheduling system "coding" that he couldn't spend any more time with me (it wasn't allowed by the computer) although he would have liked to, and advised me to follow up at a later date and ask for the right "code" without actually telling me what this "code" was.  This system, I thought at the time, was a model of efficiency....a medical assembly line that Henry Ford would have been proud of, driven by the latest/greatest medical treatment and scheduling technology.

A few weeks, or maybe a month later I got a summary bill for $310.00 from the clinic, which at the time I did nothing with.  My prior experience has always been that the insurance company pays what it's supposed to pay, reconciles the billing and I'm eventually sent a "final" bill for what I owe.

Sometime in late October, I got what I presumed to be a "final" bill for services rendered.  The Insurance Company paid $157.75 of the $310.00 leaving a balance of $152.25 for me to pay.  I recalled that my "check-up" was pre-approved by the insurer and that it was supposed to be "100% Covered".  I decided to call my Insurance Company back to see what in the wide world was going on. The following is, to the best of my recollection, a direction-ally correct, slightly embellished (for reader entertainment) transcript of the three-way phone conversation I had with Customer Service representatives from my Insurance Company and the Clinic/Provider on November 8th.  I really hope they "recorded that phone conversation for training purposes" like they always say they are going to do.

Deep-Throat: "Hi, I was just talking with Toni, my insurance company representative and she recommended we all get together and figure out how my checkup on 6/23/16 was billed.  I was under the impression that it was pre-approved and 100% covered."

Nicole (Clinic CSR): "Sure, I'll be happy to help you with that.  First, I'll have to ask you a series of about forty very personal questions to make sure you are who you say you are, it shouldn't take more than a half an hour to verify your identity, and if you get any one of the answers wrong I'll immediately hang up and never talk to you again.....is that Ok?"

Deep-Throat:  "Well I guess so....but all I want to know is how my bill was calculated....I have the invoice....right here..."

Nicole (Clinic CS Rep):  "I'm sorry sir, we have to follow the process, remember, our time is much more valuable than yours, we are doing you an incredible favor by taking the time to answer your silly questions....so here we go....what was your grandmother's, sister's maiden name prior to her second marriage?..."

(Nicole asks me all sorts of questions to verify my identity and I pass with flying colors...to thine own self be true.)

Toni (Insurance Company CSR): "Yes, Mr. Deep-Throat is concerned that his billing isn't correct.....I assured him that we paid the claim exactly per the terms of our contract and we want to verify that our process is correct.  Could you go over the codes used to generate the billing for the services he received?"

Nicole (Clinic CS Rep):  "Absolutely, happy to help...Mr. Deep Throat, you received three procedures that day, the codes are B35.1 for toenail fungus, K64.9 for hemorrhoids and N45.1 Epididymitis."

Deep-Throat: (short pause)  "But I came in for a check-up?"

Nicole (Clinic CS Rep): "You didn't have a check-up sir...."

Deep-Throat: "I didn't?"

Nicole (Clinic CS Rep):  "No Sir....like I said, you were treated for B35.1- toenail fungus, K64.9 - hemorrhoids and N45.1 -  Epididymitis."

Deep-Throat:  "But I don't have any of those things! What is Epididymitis anyway?"

Nicole (Clinic CS Rep):  "I'm sorry sir, according to your medical records you received treatment for these things when you came in to our office.  You did NOT have a physical exam.  For your reference Epididymitis is an inflammation of the small tubes on the back of your testicle."

Deep-Throat: (longer pause): "But I came in for a physical exam, that's what I wanted to have done!  I only saw the doctor for fifteen minutes.  He asked me about these things.....I remember I came in for a swollen nut-sack probably ten years ago.....and probably five years ago during a memorable encounter with the 'magic glove' one of your doctors mentioned I had a hemorrhoid....he probably put that on my chart too.....I didn't even know I had a hemorrhoid until he told me.  I have had toenail fungus for years and it doesn't bother me either.....someone saw that and must have noted that on my chart too.  I remember the doctor asking me about these things during my 6/23/16 visit ....I said everything was fine and I certainly didn't get any treatment.....I never even took off my clothes.  I thought the doctor was being thorough with his questions....asking me how I was doing and such. Honestly, I really would have remembered the doctor treating for these things....I'd absolutely remember him poking around in my butt-hole and my man-junk.  Most guys just don't forget stuff like that very easily...."

Toni (Insurance Company CSR): "Well.....I think this is pretty clear.  The patient is challenging the delivery of service here.  These charges should be re-billed as a physical exam and any funds paid by us in excess of what we've paid should be reimbursed.  The patient shouldn't owe anything for these services. They simply weren't performed."

Deep-Throat: (Thinking): At this point I thought we had resolved everything. We had determined that I had been incorrectly billed for services not rendered and/or mis-coded. The clinic would correct their error and we would be on our way. I expected Nicole to apologize for the errors and promise to immediately correct the bill. But then, Nicole, like the bull-dog-good-soldier she is, responded.... .....protecting her turf like a pissed off Son of Liberty who just got another tea-tax bill.)

Nicole (Clinic CS Rep): "I'm sorry, with all due respect, that's just not the way it works. Once something has been billed, that's the verification in the computer system that the services were actually performed. We can't just go around changing our bills because some uninformed patient doesn't understand what he's being billed for. If we adjusted our billing for every patient that complained about it or didn't understand it, we'd spend all day fooling around with this. My advice to you Mr. Deep Throat is that you just pay your bill. It's only $152.25. Unfortunately, there's nothing we can do to adjust the bill.  A wealthy young man like yourself should have no problem scraping together that kind of cash, so if I were you I'd just pay the bill and get on with your life. If you are actually a deadbeat loser who doesn't have $152 we can put you on a payment plan.  Now, is there anything else I can do for you?  I've spent way too much time on this already.  Have I answered your questions and met your needs?....Oh.....and you may get an email survey asking how my service was today....would you say that I've provided exceptional customer service?"

Toni (Insurance Company CSR): (Dumbfounded and silent....)

Deep-Throat: (Speechless.....maybe it was my imagination, but I thought I could feel my nut-sack begin to swell up again.)

Nicole (Clinic CS Rep): "Well....thank you very much for calling....have a nice day!" (click)


MEDICAL CODING

After talking to Nicole, I had to find out more about these mysterious, omnipotent "coders" who had the ability to permanently rewrite reality and create events that never actually occurred.  The first thing I did was to locate a credible job description from a reputable health care provider, in an attempt to find out exactly what a medical "coder" does.  I've attached a link and the text (Exhibit #1 below) of the job description for a "Medical Coder II" as posted on the Cleveland Clinic website.  This particular job description happens to be from the Cleveland Clinic, but it's standard language for any health care provider.  Again, this post has nothing to do with the Cleveland Clinic, absolutely nothing at all, it simply describes what's going on with a large health care provider (or every healthcare provider) located in Cleveland Ohio (or anywhere in America for that matter).

When we examine this job description we note a couple of things:

1.) Employment as a "Medical Coder II" doesn't require much education (High School or "equivalent" will suffice).  Presumably, a "Medical Coder I" doesn't need to be a high school graduate at all...just an "equivalent".  This makes sense....high school is tough and requires actually showing up to graduate....no need to shrink the labor pool.

2.) This particular job description mentions (twice) that the employee needs to be able to handle tremendous amounts of stress.  The word "deadline" is also mentioned twice.

3.) Proficiency in medical billing systems (software), productivity standards, and records to be used for reconciliation and charge follow up is required. The employee must be able to "Utilize ICD#9, ICD#10 and CPT-4 coding systems and materials" effectively.

Since the above seemed like a foreign language to me, I felt that I needed to do a little more research as to how a High School graduate (or equivalent) might handle the above technology/process.  There are hundreds of "off the shelf" software packages out there which assist the coder in processing the billing.  Most are "interactive" which tell the "coder" while he or she is entering the data and selecting "codes" what the end billing might look like. (i.e. if I use this code does it make the billed amount bigger or smaller?  So why would anyone need that feature?)  But whether the coding process is automated or manual. the American Academy of Professional Coders (AAPC) recommends the following "Ten Step Process".  (You can skip reading this in its' entirety....it's horrific....you can probably see where I'm going.)

Ten Steps for Coding from Medical Records - Before beginning the process of coding, make sure sufficient basic materials are in place, including up-to-date ICD-9-CM codebooks, a medical dictionary, and reference books for drugs, human anatomy, and the American Hospital Association’s Coding Clinic. Have a scratch pad available to take notes as you go. Make sure you have a quiet place to code and plenty of desk space. Be aware that software products such as encoders are available to help you code and are used by many hospitals. However, before you use software, the basics are best learned starting with the ICD-9-CM codebook. The Office of Inspector General’s Model Hospital Compliance Plan also prescribes not to rely 100% on computerized encoders and indicates that staff must have access to coding books.  Most hospitals use hundreds of different medical report forms. This chapter does not illustrate every possible report found within a medical record, but it does introduce those most important for beginning the process of coding. The 10 steps below will give you a framework for coding from MRs.

(Authors Note: Of course, there are numerous bullet points under the following bullet points.)

Step 1: Review Face Sheet or Registration Record
Step 2: Review History and Physical, Emergency Department Report, and/or Consultant’s Report
Step 3: Review Operative Reports, Special Procedure Reports, and/or Pathology Reports
Step 4: Review Physician’s Progress Notes
Step 5: Review Laboratory, Radiology, and/or Special Test Reports
Step 6: Review Physician’s Orders
Step 7: Review Medication Administration Record (MAR)
Step 8: Review Discharge Summary or Clinical Résumé
Step 9: Assign Codes
Step 10: Submit Physician/Coder Query/Clarification Form

So, those bullet points seem simple enough for a High School graduate (or equivalent) to follow in order to get my check-up billed accurately.  Just review the "hundreds of different medical report forms" and select the appropriate "codes".  What could be simpler?!


As I looked into this a little deeper I begin to think that some of the "billing problems" I experienced might also be tied to the relatively new ICD-10 Codes which were implemented (or supposed to have been implemented...some providers still use both.) as of October 15th, 2015.  You'll note from the CDC Chart to the left, that there are roughly nineteen (19) times as many Procedure Codes and five (5) times as many Diagnostic Codes as were available in the now obsolete ICD-9-CM Code Sets. I took a look at the Guidelines for assigning the old ICD-9-CM codes (104 pages) since, apparently, the new ICD-10-CM guidelines are still under development.  I can't help but think that it must be tough for those High School Graduate (or equivalent) coders to work through the 3,531 pages of ICD-10 codes without comprehensive guidelines, but what the heck, the codes are already implemented, giddy-up, let's git-er-done!

I also have to say that after reading through the obsolete guidelines that I have a whole new appreciation of what it must be like to work as a "coder".  The language is a bit cumbersome (to say the least) and rife with definitions, explanations and process recommendations presumably to clarify the process to a High School Graduate (or equivalent).  Here are a couple of items, off the top of my head, that I found amusing:
  • They define "And" to mean either "and" or "or" when it appears in a title. (pg. 8)
  • I particularly liked this snippet: (pg 9) "A three-digit code is to be used only if it is not further subdivided. Where fourth-digit subcategories and/or fifth-digit subclassifications are provided, they must be assigned. A code is invalid if it has not been coded to the full number of digits required for that code. For example, Acute myocardial infarction, code 410, has fourth digits that describe the location of the infarction (e.g., 410.2, Of inferolateral wall), and fifth digits that identify the episode of care. It would be incorrect to report a code in category 410 without a fourth and fifth digit."  Hey!  I just passed my high school equivalency exam...I can say "infarction" and nobody laughs.....this is an AWESOME JOB!
  • Here's an instruction/guideline on a few tips and tricks when coding "sepsis" (pg. 16)  "The terms septicemia and sepsis are often used interchangeably by providers, however they are not considered synonymous terms. The following descriptions are provided for reference but do not preclude querying the provider for clarification about terms used in the documentation: (i) Septicemia generally refers to a systemic disease associated with the presence of pathological microorganisms or toxins in the blood, which can include bacteria, viruses, fungi or other organisms. (ii) Systemic inflammatory response syndrome (SIRS) generally refers to the systemic response to infection, trauma/burns, or other insult (such as cancer) with symptoms including fever, tachycardia, tachypnea, and leukocytosis. (iii)Sepsis generally refers to SIRS due to infection. (iv)Severe sepsis generally refers to sepsis with associated acute organ dysfunction."  Of course the coder, after reading this would say/think:  "Hey!....I just graduated from High School, took this great job and I read these guidelines.  I think I'll drop what I'm doing and go over the highly-compensated-Physician, interrupt him during surgery and ask him to clarify whether he wanted this billed as Sepsis, Septicemia, SIRS or maybe I just can't read his handwriting and he meant something totally different....like a "swollen nut sack".  I'll bet I keep my job for a really long time if I, and the dozens of coders like me, keep interrupting highly compensated physicians to find out how they want this stuff billed.....that will prove that I care about my job and my future.  My job related stress should disappear!  Yes indeed I'm a real company man!" 

Unfortunately, the above are not unique examples of this silliness.  The entire instruction manual reads like this.  If the same people who authored the above wrote the instructions on "how to peel a banana" the world's monkey population would starve to death.  These "Guidelines" are obviously written by brilliant, detail oriented, highly trained specialists wanting to insure perfection in every aspect of the process.  The plan goes woefully awry when they hand the process off to legions of slightly less brilliant, "less technical" High-School Graduate (or equivalent) employees who, when faced with huge, tremendously-tremendous bigly numbers of files and impossible "stress" and deadlines (as was described several times in their job description) resort to a quick google-like search for some key words in the physicians notes just to get the file billed and off of their desk....and we have a disaster.  Moreover, their managers probably hold them painfully accountable for "missed items" and rarely, if ever (my guess) chastise them for making mistakes that generate additional revenue.  Another guess is that this is exactly how someone who goes in for a pre-authorized check-up gets billed for toenail fungus, hemorrhoid and/or "swollen nut sack" treatment. (Note: The use of the word "And" here means "and" since it is not used in a title.)

Ethics in Billing

Apparently the industry, at least on some level, has recognized that there might be a hint of a problem brewing with the medical billing process.  The American Health Information Management Association (AHIMA...Really... this organization exists.) has taken it upon itself to promulgate the Standards of Ethical Coding.

The dickens you say!  We need a code of ethics to send out bills?  I've been around quite a few blocks quite a few times and this, to my recollection, is the first time I've seen an industry develop a code of ethics for billing!  From my perspective, billing is either right or wrong, if it's wrong, it's either a mistake (to be immediately corrected) or intentional (perhaps systemic) fraud (which should be caught and prosecuted).  The billing decision tree is binary, there should be no "ethics" involved, yet, AHIMA felt compelled to develop eleven (11) coding standards which could easily be replaced by one (1).

1.) DON'T COMMIT INSURANCE FRAUD


Rectum!...Good God man it could have killed 'em!

When we do a simple text search the ICD-10 codes (3,531 pages) for the word "Rectum" we find that there are 179 separate and distinct things a health care provider can do with, to or discover about your rectum.  Who knew!  Each of these "rectum references" is surrounded by strings of medical adjectives describing exactly what might be causing your rectum issues.  I'd be the first to tell you that I have no idea how all of this works, or why, if and how all of these things can be figured out in an efficient manner by a High School Graduate (or equivalent).  I picture an exhausted, frustrated "coder" in my minds eye, surrounded by stacks of files, trying to decide which rectum code to use, knowing full well that if he/she picks the wrong code he/she will be chastised by management if anyone bothers to check his/her work.  So the "coder" makes a quick decision, crosses his/her fingers, hopes nobody digs into it too deeply, and moves on to the next file.        

Let's say this silly billing system was applied to the auto industry.  Instead of our invoice saying that we bought one (1) car for $30,000, we would not be billed at all.  We'd just drive off the lot with our brand new car!  In a month or two, an itemized bill would be generated from a list of all possible materials, parts, services, facilities and labor charges that could possibly be used in manufacturing the car.  Since our car, of course, is a custom model, the person calculating the bill would have to gather all of the documentation produced (Ten Steps and "hundreds of documents") during the manufacturing process, determine which parts and labor were actually used and calculate a total billable amount, based on the pre-negotiated prices (maintained for all of the possible parts) that an unrelated-third party finance/insurance company previously negotiated.  The final bill is sent to the insurance/finance company for review.  The insurer has no way to verify that the services were actually performed (other than the bill) and an analysis of what might be "usual and customary" parts, services and options that might be used in the production of the particular car in question.  The insurer/finance company pays the bill as presented, relying on the "Ethics" of the person doing the billing.  Another month later, the purchaser of the car gets a "final" adjusted bill for difference between the gross billing and what the insurance company paid.  His cost is $80,000 and he files for bankruptcy...(more than half of the personal bankruptcies in America are the result of health care)..luckily he gets to keep the "car".        


How does this Happen?

Well, I'll tell you.....I can easily see how something like this can happen in a complex service organization.  When I ran this post by a few friends I found that "I was not alone".  A typical response was "Oh yeah!....let me tell you what happened to me!...."

Although best practices would provide that there is significant organizational focus and numerous safeguards in place to insure that "everything billable gets billed", I rarely (if ever) hear about managements efforts to investigate "out of control" revenue growth, or convene a Board Level, emergency task force to investigate why business is booming and amounts billed are skyrocketing.

In my specific case, ironically, when put under the microscope, nobody did anything wrong:
  1. The Physician didn't do anything wrong.  He interviewed me for 15 minutes and submitted his notes of the office visit for billing.  As an aside, this physician was one of the most thorough doctors I'd ever been to.....he covered my entire health history in 15 minutes and typed everything into the system.  As I recall he was an incredibly fast typist.  He seemed to be a really nice, caring guy and as I mentioned, I thought he was being extremely thorough.
  2. The "coder" didn't do anything wrong.  As we've learned, Coders are highly trained High-School graduates (or equivalent) put under enormous pressure to figure out and select the proper coding from 159,596 possible codes (ICD-9 and ICD-10 combined), independently working (unsupervised) following the APC (Ten Steps) and the AHIMA "Ethics" to be sure that my check-up bill, and the hundreds of cases billed that day, are all 100% accurate.    In my case, he/she meticulously culled through all of the documents (Ten Steps) and whenever he/she found a word that might be billable he/she looked up a code to make sure that the provider was adequately/accurately reimbursed. Perhaps this coder was rewarded/compensated on speed/efficiency/transaction volume? Perhaps there are rankings/bonuses or other management incentives in play to maximize the efficiency and dollar volume of transactions and billing processed?  Perhaps that's how a health consumer can go in for a checkup and find they've been treated for "toe fungus", "hemorrhoids" and a "swollen nut sack"?  Perhaps this is why a bill that was pre-approved and supposed to be covered by an insurer at 100% somehow morphs into a $310 dollar charge resulting from fifteen minutes of a Physician's Q&A?
  3. The people who designed the billing system didn't do anything wrong.  They clearly wanted to make sure that the customer wouldn't be confused by the bill they received.  My billing simply said "Physician or Professional Services - New Patient Visit - Level 3".  There was no mention of "Toe fungus", "Hemorrhoids" or "Swollen Nut Sack".  These might be important conditions that the consumer (Me) didn't even know they were being treated for....Why cause confusion or raise concerns?  Keep the bill simple by not disclosing what was done!  Health care consumer confusion would just generate customer service calls and additional leg work on the part of everyone involved in the AHCDS process. Fortunately, there is an extremely efficient consumer alternative.  We, as savvy consumers, can take on the role as super-sleuth-investigator, get the insurance company and provider on a conference call, gather all of the information, codes, and lingo, fully understand what's happening and then be told in a very polite, professional manner that we have no idea what we are talking about, that reality is not what we believe it to be and we should just pay the bill immediately, implying that we are deadbeats and we will soon be sent to collection. 
  4. The insurance company didn't do anything wrong.  The insurance company received the billing and paid the pre-negotiated fee for the services billed.  The remainder or "over billing", as we know, is always the responsibility of the health care consumer.  That's why the consumer signs all of those forms consenting to legal and financial responsibility for any and all billing for professional services, whether they were ever actually rendered or not.
  5. The health care consumer, of course, didn't do anything wrong.  After they get the bill, they may (or may not) ask a few questions, get some odd, gobbed-y-gook answers, throw up their hands and either pay the bill under threat of collection or file for bankruptcy (if the bills are too big).  Did I mention that Medical bills are the leading cause of personal bankruptcy in America?  I'm sure I did....The Sons of Liberty would have hated this statistic.
  6. The CDC didn't do anything wrong.  It's of course important to to have tens of thousands of billing codes that nobody without a Masters degree in Health Care Administration can understand, and assign the responsibility of properly analyzing (and billing) these codes  to highly stressed High School graduates (or equivalent) under threat of termination if they somehow can't figure out how to hit their billing quotas. 
  7. The Health Care Provider's Finance department didn't do anything wrong.  They are here to help!  In fact, right on the bill they sent out to me they say that they are "Excited to Announce" their new 0% finance option for the charges they billed for services that were never actually rendered.
  8. The Collection Company didn't do anything wrong.  (Did I mention that they placed me for collection on this?)  They call my cell  phone multiple times per day (without leaving a message).  I never pick up the call.  I know what it's about since I traced the number to a collection business which is contracted by the Health Care Provider to collect medical debts.  The calls began shortly after I had my disagreement with Nicole.   Oddly, even after hundreds of calls with no message left, there still has never been any written demand for payment.
  9. The Credit Reporting Services (Experion, Equifax, TransUnion, etc.) Didn't do anything wrong (yet). They simply report a presumably valid unpaid debt, which they do for every deadbeat (presumably like me) that doesn't pay their bills for services that were never rendered.  I'm waiting for this item to appear on my otherwise pristine credit report.  It will be the ONLY negative thing out there and should stick out like a sore thumb (Billing Code to follow).
Yes indeed, this is quite a system we've come up with.  Yet, in my silly case (and presumably just about every case) there are all sorts of codes (and billing) being generated for procedures and services that were never performed.  All because a physician asks a seemingly innocent question.  I'm glad my doctor didn't ask if I had ever had gangrene...I would have been billed for an amputation.  The fact that I still had all of my extremities would apparently be irrelevant when disputing the charges.  Most insurance people I know would call this "billing errors" at best and "Insurance Fraud" at worst.

Actually, when I think about the entirety of this system, I'd be shocked to learn that anything is actually billed correctly.  (other than large, insured cases where presumably both insurers and providers cull through the records with a fine toothed comb).  But apparently, by the way it was explained to me by Nicole, to paraphrase, that "If it has been billed, then the service must have been performed". So everything must be Ok!

Insurance Fraud?  Ineptitude?  Who Knows?

Thinking this through, If I were going to design a Wells Fargo-esque  system to commit insurance fraud this would be it!  It has all the elements needed to produce a systemic fraud:
  1. No controls/responsibility....complex system assigned to a high school kid (or equivalent) apparently placed under immense stress to "get the job done".
  2. Complexity - tens of thousands of billing codes.
  3. Documentation - all processes and procedures are documented to the point where the documentation is so complex that nobody can actually follow the process.  Management is off the hook and the "underlings" are left hung out to dry for not following process.
  4. No real accountability. Indirect and direct incentives to "over-code". 
  5. Lack of transparency.
  6. Everyone is just "doing their job".
If I were a class action lawyer trying to untangle this mess, here's what I'd be up against:
  1. HIPPA
  2. Accepted practices and fully (overly) documented process.
  3. Every error is presumably different...a pattern would be nearly impossible to find.  Every error can be blamed on the ineptitude of the "coder" and/or the complexity of the system.
  4. All of the "big cases" are reviewed by someone who knows what they are doing...so they are probably billed correctly, or at least as accurately as possible.
  5. The full legal and political might/clout of the AHCDS organization would come to bear on you.
  6. Political and media pressure....you'd be suing a "not-for-profit" pillar of the community.  You'd be labeled a shark lawyer just out to make a buck.
  7. You'd have to try to keep the judge/jury awake/engaged.  This is the most boring, tangled, incomprehensible mess ever devised.
  8. The suit would take up nearly a decade of your life and you'd only be paid once all of the appeals are exhausted.
So as a class action lawyer.....you'd probably throw up your hands and either give up during discovery, or decline to file the case in the first place.

What's Next?

If the CDC were to actually recognize the problem and attempt to fix it, we'd most likely end up with hundreds of thousands of additional codes and six figure accredited "coders" who, at a minimum, have at least some level of Ivy League-like advanced medical training.  High School Graduates (or equivalent) will be outlawed as "coders".  Complexity begets more complexity.  As a society, we can always count on brilliant people to come up with overly complex, wasteful solutions, which add cost, overhead and job security to the process, while simultaneously killing productivity.  Ideally, as a health care consumer, I'd prefer to have all of this brain-power dedicated to providing actual, quality health care rather than feverishly working to get it (incorrectly) billed.  

The next logical step in the medical billing process, since the administrative cost will have been driven up to truly un-affordable levels, will be to fully automate it.  Artificial Intelligence will be used to replicate the "Ten Steps" and apply "Ethics" to the billing.  Like agriculture over the last few decades (agri-business replacing family farms) and what's about to happen to cab/truck drivers (replaced by self driving vehicles) and fast food workers and bank tellers (replaced by kiosks), automation/AI will replace human medical billing "coders".  We've made the system so complex that no human can possibly do the job accurately at a reasonable wage.  So the process must be automated.  We must be able to generate server farms full of terabytes of medical data.  There will be millions of "codes" to slice and dice and analyze.  An actuary's dream come true.  Physician's electronic notes or voice recognition (or perhaps just a "billing chip" implanted in the physicians head installed upon graduation from medical school) will be analyzed by AI, source docs/bytes/sounds will automatically be coded/mis-coded accordingly and the nice folks who used to be employed as medical billing coders will join the farmers, truckers, cab-drivers and fast food workers and bank tellers on the unemployment line. The supply of "unqualified" labor grows and wages continue to spiral downward.

Since toe-fungus, hemorrhoids and epidimysis are all relatively common conditions, presumably affecting millions of Americans, yet flying frighteningly beneath the AHCDS radar, once this detailed billing is analyzed, this "big data" will tell us that we are on the threshold of a seminal shift of the health of the average American.  The light bulb will go on at the CDC.  They will be forced to deploy billions of taxpayer dollars to research and stop the epidemic spread of hemorrhoids, toe fungus and swollen nut sacks...bicycle sales will fall off a cliff....truckers "donuts" and Preparation H will fly off the shelf.....the air waves will be flooded with disturbing public service announcements advocating routine "nut sack" self examinations and "see your doctor immediately" if you have SNSS "Swollen Nut Sack Symptoms".  The pharmaceutical giants will deploy huge amounts of capital and advertising dollars, IPO's will hit the streets.....everyone will want to get in on the ground floor to cure these heretofore unheralded health risks.  All because a bunch of AI "coders" can't accurately understand a physicians notes from a routine physical exam.

Sometimes "big data" isn't necessarily "good data"....it's just big....and expensive.

Interestingly, all of this absurd waste and misguided, unproductive overhead actually increases GDP. Could you imagine if all of this resource were put toward something productive?  The AHCDS billing mechanism is America's version of China's "ghost cities", industrial over-capacity and fake eCommerce businesses.   It artificially inflates GDP and transfers wealth to businesses and people far in excess of the real economic value of their goods and services.  What if, in reality, the "productive" aspects of the AHCDS only contributed US$ 2 Trillion to GDP, rather than US$3 Trillion?  What if a trillion or so dollars was actually pissed away on goofy, unproductive billing mechanisms, rather than spent on real economic growth.  After the last eight (8) years of near ZIRP, we'd conclude that our economy is actually in a stealth recession?  Really?  US GDP might be significantly overstated because of all this foolishness?  Could it be that the American voter actually recognized this phenomenon (because they are feeling "poorer" by the year) before the economists ever had a clue? Could this phenomenon be one of the reasons we now have a reality TV star as Commander in Chief? So, the only industry, the AHCDS, that gives us the hope that the US Economy is actually growing is built on fake, erroneous, billing for hemorrhoid, toe-fungus and nut-sack treatment?  Are you kidding me?

Thinking back on my visit to Boston.....In the words of Thomas Paine......

“These are the times that try men's souls.”


Epilogue:

I had been putting off a colonoscopy for some time thinking that:

1.) I've always been in good health and;
2.) It's literally and figuratively, a pain in the ass.

Anyway a couple of weeks ago I finally had it done and to my surprise, the physician removed a "nearly golf ball sized" polyp from my colon.  Don't worry, I'm fine, no complications, thank goodness.  But now I must say, after my recent run-in and self-study education as to how medical billing actually works, that I'm really looking forward to receiving the bill for this procedure!  I'm guessing that, based on my above described experience with  medical procedure "coding", if there's any lack of clarity in the physicians notes, this little adventure could very well be billed as ICD-10CM Code T185XXA "Golf ball extracted from anus or rectum"....I also have to say that I'm dismayed, disturbed and a bit frightened that there's actually a code specifically assigned for that ailment.....it must happen much more often than I'd suspect.

Moreover, after doing a little more research, I'm also concerned that this ICD-CM T185XXA Code "Golf ball extracted from anus or rectum" is in direct and irreconcilable conflict with the USGA "Rules of Golf", specifically, Rule(s) 20 "Lift Clean & Place"; Rule 28 "Unplayable Lie"; and Rule 25 "Abnormal Ground Conditions and Embedded Ball".  A two stroke penalty and a "free drop" is hardly an appropriate measure in this particular situation.  In the interest of public safety and the good of the game, I strongly urge the CDC and USGA to convene a combined emergency task force to reconcile the conflicts between these regulatory authorities.  We need to assemble the brightest minds in both administrative bodies, have several meetings at various Caribbean resorts, and in a few short years we should be able to come up with an incredibly complex solution that will not only fail to solve the problem, but cost a ton of money make matters much worse.  We must act now ......before it's too late.

Give me accurate, inexpensive medical billing or give me death!


Additional Reading Material


Exhibit #1
Job Description (Emphasis Added)
http://jobs.clevelandclinic.org/job-detail.html?70156926-professional-fee-coder-ii&utm_source=Indeed.com&utm_medium=Organic&utm_content=70156926&utm_campaign=none
















Text of Job Above Description

PROFESSIONAL FEE CODER II

LOCATION: INDEPENDENCE, OH
FACILITY: BUSINESS OPERATIONS CENTER
PROFESSIONAL AREA: FINANCE
DEPARTMENT: CCHS PAYOR DENIAL MGMT
JOBCODE: U99931
SCHEDULE: FULL TIME
SHIFT: 8:00AM-5:00PM
JOB DETAILS

JOB SUMMARY:
Monitors, reviews and applies correct coding principles to clinical information received from ambulatory areas for the purpose of reimbursement, research and compliance. Identifies and applies diagnosis codes, cot codes and modifiers as appropriately supported by the medical record in accordance with federal regulations. Ensures that billing discrepancies are held and corrected.

RESPONSIBILITIES:

  • Compares and reconciles daily patient schedules, census, and registration to billing and medical records documentation for accurate charge submission, which includes processing of professional charges, facility charges, manual data entry. Investigates and resolves charge errors.
  • Meets coding deadlines to expedite the billing process and to facilitate data availability for CCF providers to ensure appropriate continuity of care. Works held claims and claim edits in the CCF claims processing system. 
  • Maintains proficiency in related CCF billing systems, productivity standards, and records to be used for reconciliation and charge follow up. Utilize ICD#9, ICD#10 and CPT-4 coding systems and materials. 
  • Maintains current knowledge and skills through reading and utilizing coding resources. Attends and participates in coding education systems. Other duties as assigned.

EDUCATION:

  • High school diploma or equivalent.  
  • Specific training related to CPC procedural coding and ICD9, ICD10 diagnostic coding through continuing education programs/seminars and/or community college.  
  • Working knowledge of human anatomy and physiology, disease processes and demonstrated knowledge of medical terminology.

CERTIFICATIONS:

  • Certified Professional Coder (CPC), Certified Coding Specialist Physician (CCS-P), Registered Health Information Technologist (RHIT), Registered Health Information Administrator (RHIA), or Certified Coding Associate (CCA) by American Health Information Management Certification (AHIMA).
  • Existing CCF employees credentialed with CMC may be required to obtain CPC (or CCS-P, RHIT, or CCA) within 12 months.

COMPLEXITY OF WORK:
Requires critical thinking and analytical skills, decisive judgment and work with minimal supervision.  Applicant must be able to work under pressure to meet imposed deadlines and take appropriate actions.

WORK EXPERIENCE:
Minimum of two years of coding experience in a health care environment and or medical office setting required.  Candidate must currently be employed as a Professional Fee Coder I at the Cleveland Clinic or have met all the training, quality and productivity benchmarks of Professional Fee Coder I for six months to apply for a Professional Fee Coder II position.

PHYSICAL REQUIREMENTS:
Typical physical demands involve prolonged sitting and/or traveling through various locations in the hospital and dexterity to accurately operate a data entry/PC keyboard.  Manual dexterity required to locate and lift medical charts.  Ability to work under stress and to meet imposed deadlines.

PERSONAL PROTECTIVE EQUIPMENT:
Follows Standard Precautions using personal protective equipment as required for procedures.
#LI-CD1

ICD CODES:
https://www.cdc.gov/nchs/icd/icd9cm.htm

ICD Codes - General Information
https://en.wikipedia.org/wiki/ICD-10

Epiditimytis - N45.1
http://www.icd10data.com/ICD10CM/Codes/N00-N99/N40-N53/N45-/N45.1

Toenail Fungus - B35.1
Convert ICD-10-CM B35.1 to ICD-9-CM
ICD-10-CM B35.1 converts directly to:2015 ICD-9-CM 110.1 Dermatophytosis of nail
Successful EHS Implementation
http://profitable-practice.softwareadvice.com/how-cleveland-clinic-tackles-ehr-implementation-0713/

Medical Billing Software
http://www.capterra.com/medical-billing-software/

http://downloads.lww.com/wolterskluwer_vitalstream_com/sample-content/9780781790642_Falen/samples/Chapter_3_Sample.pdf
Ten Steps for Coding from Medical Records - Before beginning the process of coding, make sure sufficient basic materials are in place, including up-to-date ICD-9-CM codebooks, a medical dictionary, and reference books for drugs, human anatomy, and the American Hospital Association’s Coding Clinic. Have a scratch pad available to take notes as you go. Make sure you have a quiet place to code and plenty of desk space. Be aware that software products such as encoders are available to help you code and are used by many hospitals. However, before you use software, the basics are best learned starting with the ICD-9-CM codebook. The Office of Inspector General’s Model Hospital Compliance Plan also prescribes not to rely 100% on computerized encoders and indicates that staff must have access to coding books.  Most hospitals use hundreds of different medical report forms. This chapter does not illustrate every possible report found within a medical record, but it does introduce those most important for beginning the process of coding. The 10 steps below will give you a framework for coding from MRs.

American Health Information Management Association - AHIMA - "Ethical Coding"
http://bok.ahima.org/doc?oid=106344#.WFWyvFUrKCg

ICD-10CM CODES - 2017
ftp://ftp.cdc.gov/pub/Health_Statistics/NCHS/Publications/ICD10CM/2017/

Monday, December 5, 2016

Holiday Wishes.....from a born again Investment Banker

This, of course, is the time of year when we Investors, Investment Bankers and the Titans of Finance count our numerous blessings and think about all of the good things, God's work, if you will, that we've accomplished over the last year.  We rear back in our Italian leather Pininfarina Shiatsu massage desk chairs, gaze out at the skyscrapers interrupting our horizon, with a good cigar and a nice Islay Scotch. We are humbled by our good fortune and warmly give (implied) thanks to all of the "little people" who've sacrificed so beautifully to make our success possible.

The Near-ZIRP fueled markets are making new all-time highs on a nearly daily basis now. We marvel at our own year-end genius, being able to contrive yet another, dare I say brilliant, series of accounting schemes which cloak our barely viable businesses, making them appear as though, to the untrained eye, that they are actually not on life support, but perhaps, nearly profitable. Our epic bonuses, because of this creativity, have been determined, calculated and all but guaranteed. We're perusing the listings for island vacation homes and the deposits on our yacht upgrades/refits have been wired to ensure an early spring delivery.   This was another huge, tremendous year.  We are truly humbled and grateful.

But alas, like all truly Type-A Money Men, we are 24x7 animals.  We are wound tighter than a pallet of two-dollar watches purchased at a discount on T-Mall.  What keeps us up at night? What gives us those ulcers that the "little people" never seem to get?   Our greatest fear, while visions of stock options dance in our heads, is that somehow, someday, when we least expect it.....

......our Collateral for this gigantic mess will somehow morph into a humongous pile of tinsel-covered doggie turds nestled under our collective Christmas trees.......

To that end, I present to you:

The Holiday Tree of "Tinsel Covered Doggie Turds!"






































So what do the doggie-turd-ornaments on the above tree represent?  The seven businesses above (With ample assistance from Western Investment Banks) are the poster children for debt fueled, acquisition-driven accounting schemes creating billions of dollars of "Questionable Assets" (as defined in prior posts).  Of course, I've covered  AlibabaTencentSoftbankYahoo! and Fosun in previous blog posts, but the numbers are getting sillier by the quarter.  In the spirit of the holidays, these goofy numbers should absolutely be revisited.  Make no mistake about it, this mess is a carefully choreographed, incestuous global scheme made possible by the "Theory of Financial Relativity" and the participation of US/EU/Swiss Investment Banks.  The tentacles and complex interrelationships stretch much deeper than could possibly be discussed in this post, but lets take a shot at it anyway.

To start, feel free to peruse my original posts (click on the company name below), but here are the "one sentence" descriptions, gleaned from my analysis, that I'll use to describe these businesses.

Alibaba - Turning tinsel-covered-doggie-turds to gold.
Yahoo! - Expert at managing "dirty little secrets".
Softbank - The world's premier "Happiness" vendor.
Tencent - Skyrocketing revenue from "free services"...huh?
Fosun - You can't read the annual reports without laughing.....financial comedy gold
JD.com - "I can get it  for you wholesale!"
Evergrande - "Why finish a project when you can just start a new one!"
Investment Banks - "Sure, we can make that happen, but the fees will be much more than the customary thirty pieces of silver..."

Now, let's take a topside view of the "Magnificent Seven" today vs. 2012.
































All of the above are summarized from the relevant financial reports (links below).  When we examine the above 12/31/2012 Balance Sheet Figures when compared to the most current 2016 figures a few thing absolutely jump out at us:

  1. The Market Cap of these businesses has increased nearly five fold in roughly three and a half years from US$130 Billion to US$615 Billion.
  2. "Questionable Assets" (Intangibles, Goodwill, Investments in "Investees", Financial Assets "held for sale", Construction Projects and Construction In Progress (Which are inherently difficult to value/reserve) have increased nearly ten fold, from US$39 billion to a whopping US$374 Billion.  "Questionable Assets" of these seven businesses now represent 57% of their collective Balance Sheets. 
  3.  Bonds, Notes and Bank Debt have increased seven fold from US$39 Billion to US$270 Billion.
  4. Liabilities as a percent of "Net Assets" (Total Assets: Less: Questionable Assets) have doubled from 88% to 170% in just over three years.  In other words, there are now $1.70 in bills to be paid for every $1.00 of "Net Asset" Book Value.
Here are a few hypothetical questions:
  • If you build 10,000 apartments and sell one for a million dollars (In a slightly less than arms length transaction) are the rest of the unsold apartments also worth a million dollars each?  
  • If you borrow from US Investors and pay $10 million for 5% of an unprofitable, money-sucking company (purchased from a good friend), is the company now worth $200 million?  When you buy another 5% for $20 million is the same company now worth $400 Million?
  • To paraphrase Martha Stewart, increasing assets is normally a "good thing", but ask anyone who bought a house in Florida or Las Vegas in 2007, borrowing money to buy that house set them back a pretty penny once the value of that house was reset.  So what might happen when the value of the underlying assets of the Magnificent Seven is reset?  What happens to the $472 Billion of liabilities ($270 Billion of which is Bank Debt and Bonds)?
  • As discussed in prior posts, what if the RMB is actually worth a nickel rather than 15 cents? Will the Magnificent Seven Balance Sheets, Revenues and (fake) Earnings be worth a third of what they are worth today for Western Investors?  What if, like the current economic events and related hyperinflation unfolding in Venezuela, the PBOC has to re-double China's money supply ...again?  Like China, Venezuela is resource rich (more oil reserves than Saudi Arabia) but their economy has been woefully mismanaged (more poverty than Brazil).  Like Venezuela, China's Central Bank has been running the printing presses on overtime.  The PBOC has doubled M2 in the last five years and is currently increasing broad money at 10-15% a year.  What if, like in Venezuela, China's accumulated cost of mismanagement and kicking the can down the road accelerates?         
Three and a half years ago the Magnificent Seven were all comparatively small, harmless little accounting schemes, floundering around in China (....and Japan with tentacles reaching to China in the case of Softbank).   Is it more probable that these businesses are incredibly profitable cash machines, generating 40% YOY growth and enormous investor returns?....or, perhaps, more likely, that they just might be money-sucking Ponzi schemes (Implemented under the watch of the CCP and the PBOC) to support China's teetering dual currency system and keep tabs on their increasingly querulous population?  Xi's "Social Credit System", an initiative to track Chinese Citizen's every move requires significant resource and capital.  The stated goal in this Orwellian aggregation of big-data is to “Allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step”. The odd twist is that a significant portion of this "social credit" system is being funded by Western Investors/Capital. As I've discussed, this wouldn't be the first time the CCP has tried to "Fake it" to control their message in an attempt to make folks believe their presentation of the facts appears to be a bit different from reality. (The old joke is that the only accurate piece of information in a Chinese Newspaper is the date….)  I'll ask the obvious......Why would the Chinese government allow foreign investors to benefit handsomely from these IT "crown jewels"?   Further, why would these phenomenal cash machines be aggressively seeking capital everywhere on the planet except mainland China?

As luck would have it, in their insatiable thirst for fees, Western Investment Banks saw the need/opportunity and got involved.  They set up some Caribbean Shells, hired a few mail-order accountants and found some hired-gun economic “experts” supporting their thesis, in an awkward, yet successful attempt to put the details of these schemes out of the reach of US regulators while simultaneously gaining access to Western Capital.  The Bankers began to slop gobs of lipstick on these little Christmas-turds and convinced greedy, naive, rudderless investors that Chinese eCommerce is/was the next big, silly thing ....and now look what we have!  There is nearly US$1.1 Trillion of "Maximum Economic Impact" (MEI) concentrated in these seven bogus businesses (see above schedule).  (I define MEI as the Market Cap of the stock which could/might/will go to zero.....PLUS the value of the balance sheet liabilities.  i.e.) Creditors expect to be paid back......Hint: Most of them won't be.)  Note that technicians would argue that the MEI should be reduced by the liquidation value of any assets plus cash on hand, but in practice, when these businesses "go dark"  offshore creditors and shareholders have little/no ability to recover.

Obviously, this folly would have had a limited impact on global markets had the Investment Banks not gotten involved.  Without all of this US/EU/Swiss capital deployed, the exposure/risk would have been much smaller.  The now unavoidable carnage would have been substantially contained on mainland China and US Markets would have been relatively unaffected by the impending defaults. Chinese banks and regulators, as they did with the equity markets in August 2015, would step in and continue to refinance the losses, minimize the write-offs, extend credit, increase the money supply and kick the can down the road....just like they've been doing with virtually every asset class over the last few years.  Unfortunately, containment is no longer possible and the contagion continues to grow.

Because, in big round numbers, roughly $3 Trillion of these securities are widely held (Again: The Magnificent Seven is just the tip of the China Syndrome iceberg) when the values reset, investors will be heading for the exits in unprecedented droves. (Remember 2009?)  The trust in our financial institutions will again be destroyed.  As investors, we'll lick our wounds and start all over again.....the beat goes on.   TARP....to infinity and beyond.....

A Fond Holiday Farewell

This is also the time of year when regimes and administrations reevaluate their personnel.  Budgets and Org. Charts get "adjusted".  Organizations, despite incredible fake profits, take it upon themselves to "do more with less".  We are often forced to say farewell to old friends, wishing them well in the next phase(s) of their lives.  (For parachute equipped upper management it's usually "spending more time with family and friends"....for underlings, it's more often "frantically searching for employment from their parent's basement".)  Of course you've heard by now that Mary Jo White, the SEC Chair, has resigned  and will be vacating her post by the inauguration, forgoing the final two years of her appointment. We, of course, wish our little elf all the best as she moves on to whatever she might be moving on to.

Sadly, the passage of time will eventually show that Mary Jo was actually the second worst regulator in the history of the SEC.  If you believe that the job of the SEC is to randomly send nasty-grams to CFO's criticizing their disclosures (or lack thereof) while documenting their responses, then Mary Jo's SEC has done a pretty good job.  On the other hand, if you believe (as I do) that the SEC should actually review filings and IPO's and gosh-oh-golly-gee, perhaps prevent systemic fraud and questionable securities from hitting the markets in the first place, then I'm afraid the SEC under Mary Jo's watch has come up woefully short.

If our local police department operated like Mary Jo's SEC, the dialogue between officers and an (alleged) masked, armed perpetrator in a bank lobby would go something like this:

Police:  "Sir, with all due respect, could you explain to us why you are wearing a ski mask and pointing a gun at the teller?"

Perp: "Absolutely....first, I'd like to thank you for stopping by and taking the time to review my business....ummmm...I mean my vacation plans.  I'd also like to personally thank you for your public service.  That said, I'm wearing a ski mask because I'm going on a ski trip....yeah...that's it.....a ski trip.  Of course, I need to withdraw some money for my vacation.  Since this is an 'open carry' state, the teller noticed my firearm and asked me if she could see it...she mentioned that she is a real gun fancier.....sort of an Annie Oakley as it were.  I can see that you clearly don't understand the situation and what's actually going on here.  I'm sure it looks quite confusing, but I'm also grateful that you've given me the opportunity to clear things up."

Bank Teller: (Nervous, frightened, hands in the air, nodding 'yes' in agreement.)

Police: "Well.....I guess that makes sense....you should really be more careful though.  You can see how something like this might cause some raised eyebrows for someone unfamiliar with your business/vacation model....can't you?"

Perp: "Now that you mention it, I can see your point of view.  I'll take your feedback under consideration on all of my future transactions.  Thank you so much for your assistance.  Of course, if you ever tire of police work, please feel free to look me up and I can probably find you a cushy job in my organization!"

Police: (Leaving the scene walking back to their squad car) "Wowww....can you believe that guy?  What a dope...wearing a ski mask and bringing a gun into a bank?  What was he thinking?.... ..LOL....LOL"

Perp: (Robs the bank.....of course.)

Police: (Upon reviewing what happened, the Police Commissioner sends a sternly worded letter to the alleged perpetrator at his Cayman's beach house, criticizing him for his lack of cooperation.  The Commissioner requests additional information 'pronto' or he/she will be really, really upset.)

Of course, if the police would have simply arrested the "perp" in the bank (or at least asked him to leave before the crime took place) the problem would have been solved....and nobody would have lost any money.

I also mentioned that Mary Jo will be vilified as the "second worst" SEC Chair in history.  With little doubt, based on the events about to unfold, the worst Chair in history will most certainly be the next one.  My guess is that Mary Jo has resigned because she sees the handwriting on the wall (she's actually a pretty smart lady) and is hoping to distance herself as soon as possible from the impending, inevitable disaster (which she failed to see coming until now....Ooopppss!). From her point of view, the longer this mess holds together, the less likely it will be that she (rather than her successor) will be required to give those long, tedious hours of "What did you know and when did you know it...." Congressional testimony as is required by our political process once the tinsel-covered-doggie-turds hit the fan.

Based on the current political environment, Mary Jo's replacement will probably be a laissez-faire, less-government, figurehead who will spend his/her tenure making a few speeches, hobnobbing with corporate royalty and playing golf.  Nice gig if you can get it.  He/she will undoubtedly accept the appointment with the same oblivious, lack of understanding of his/her fate that an Iraqi goat might have while grazing aimlessly in a war zone mine-field.   

Goat: (thinking) "Hey....the grass over there looks really tasty"....clip-clop-clip-clop.... BOOM!!"


So How Can We Make Money From This Mess?

I've been thinking about this for years.  The obvious answer is "short the doggie-turds" and collect your pay-check.  Unfortunately, as I've mentioned before, because of the "Law of Financial Relativity" it's just not that simple.   This valuation anomaly can go on for quite some time.  It serves no one's interest to have the whole thing collapse overnight.  In fact, the problem is so consuming that Central & Investment Bankers can't afford to just let these "asset" valuations collapse without a fight. Misery loves company and tragedy makes strange bedfellows.  Like most things in life, I'm sure the signals leading up to the reset will be obvious after the fact, but the real trick is to recognize them beforehand and take appropriate action.  Of course, as always, I'll let you know what these signals might be as soon as I figure that out.   

In Conclusion......

Finally, as you might recall, I own, in my humble, slightly biased opinion, the best insurance agency in Cleveland, OH.  Since our little insurance business has been so big-ly, hugely, tremendously-tremendous this year and this is indeed a Christmas Greeting......I wanted to let all of you know that we've taken on additional part time staff to ramp up for the holidays!........for our little business, customer service is now, has been and will always be Job #1!




Merry Christmas!
Happy Hanukkah!
Feliz Navidad!
Happy Diwali!
Happy Kwanzaa!
Happy Festivus!
Happy Holidays!






Additional References

Mary Jo White "Sending nasty grams" to businesses
http://www.marketwatch.com/story/sec-cracks-down-on-made-up-numbers-in-company-earnings-2016-08-18

http://www.marketwatch.com/story/sec-tightening-screws-on-inappropriate-earnings-numbers-2016-11-15

Alibaba Financial Statements - 9/30/16
http://www.alibabagroup.com/en/news/press_pdf/p161102.pdf

Alibaba Financial Statements 424(b)4 - 3/31/2013
https://www.sec.gov/Archives/edgar/data/1577552/000119312514347620/d709111d424b4.htm

Softbank Financial Statements - 9/30/16
http://cdn.softbank.jp/en/corp/set/data/irinfo/financials/financial_reports/pdf/2017/softbank_results_2017q2_001.pdf

Softbank Financial Statements - 12/31/2012
http://cdn.softbank.jp/en/corp/set/data/irinfo/financials/financial_reports/pdf/2013/softbank_results_2013q3_001.pdf

Tencent Financial Statements - 6/30/16
http://www.tencent.com/en-us/content/ir/rp/2016/attachments/201601.pdf

Tencent Financial Statements - 12/31/12
http://www.tencent.com/en-us/content/ir/rp/2012/attachments/201202.pdf

Fosun Financial Statements - 6/30/16
http://media.corporate-ir.net/media_files/IROL/19/194273/2016/1.%202016IR%20_656_Eng.pdf

Fosun Financial Statements - 12/31/2012
http://media.corporate-ir.net/media_files/IROL/19/194273/001_EW0656AR.pdf

JD.com Financial Statements - 9/30/16
http://ir.jd.com/phoenix.zhtml?c=253315&p=irol-corp-newsArticle_Print&ID=2222411

JD.com F1- Financial Statements - 12/31/12
https://www.sec.gov/Archives/edgar/data/1549802/000104746914000443/a2218025zf-1.htm

Yahoo! Financial Statements - 9/30/16
https://www.sec.gov/cgi-bin/viewer?action=view&cik=1011006&accession_number=0001193125-16-764376&xbrl_type=v#

Yahoo! Financial Statements - 12/31/12
https://www.sec.gov/cgi-bin/viewer?action=view&cik=1011006&accession_number=0001193125-13-085111&xbrl_type=v#

Evergrande Financial Statements - 6/30/16
http://file.irasia.com/listco/hk/evergrande/interim/2016/intrep.pdf

Evergrande Financial Statements - 12/31/12
http://202.66.146.82/listco/hk/evergrande/annual/2012/ar2012.pdf

The China Syndrome - US$1.5 Trillion ADRs on US Markets
http://deep-throat-ipo.blogspot.com/2015/03/the-china-syndrome.html

Social Credit Score WSJ
http://www.wsj.com/articles/chinas-new-tool-for-social-control-a-credit-rating-for-everything-1480351590

"Going Dark" - Reuters - 1/14/13
http://www.reuters.com/article/china-accounting-idUSL2N0AJ24120130114

"Going Dark"
http://china.fixyou.co.uk/

Mary Jo White resigns - SEC Press Release
https://www.sec.gov/news/pressrelease/2016-238.html

Venezuela's Hyperinflation - Forbes
http://www.forbes.com/sites/timworstall/2016/12/03/congratulations-to-bolivarian-socialism-venezuelas-largest-banknote-is-now-worth-2-us-cents/#577745d378d0

Venezuela M2
http://www.tradingeconomics.com/venezuela/money-supply-m2

Venezuela - More Oil than Saudi Arabia
https://www.bloomberg.com/quicktake/venezuela-price-revolution