Financial life in a big town

It doesn’t compute: Medicare’s bill for artificial feet has jumped by more than half, although foot and leg amputations due to diabetes continue to decline dramatically.

Medicare paid $94 million for artificial feet in 2010, according to research conducted for The Associated Press. That was nearly $35 million more than in 2005, even though in 2010, Medicare covered about 1,900 fewer such prostheses.

It works out to a 58 percent cost increase over five years.

Artificial feet represent a tiny slice of the $550 billion Medicare spends on health care for 49 million older and disabled people. But the cost spike highlights basic questions about affordability, technology and appropriate care that confront lawmakers looking for a way out of Medicare’s financial troubles.

Program officials say they’re concerned. Medicare “is aware of and shares the concerns this research raises about lower limb prosthetics,” said spokesman Brian Cook.

Industry says there’s nothing wrong. Patients are benefiting from new technology in artificial limbs used for wounded troops returning from the Iraq and Afghanistan wars.

Others dispute that conclusion, saying there’s no body of scientific evidence to back it up.

A doctor who works with amputees questioned whether a high-tech foot designed for an active person is appropriate for an elderly patient with diabetes, a major cause of lower-limb amputations. Losing a foot means the patient is at an advanced stage of the disease and probably dealing with other problems that limit physical activity.

“A lot of our patients are just trying to transfer from the wheelchair to the toilet,” said Dr. Howard Gilmer of National Rehabilitation Hospital in Washington.

A report last year by the Health and Human Services inspector general found widespread questionable billing for lower-limb prostheses, a category that includes artificial feet.

In 2009, Medicare inappropriately paid $43 million for lower-limb prostheses that did not meet certain basic standards for accurate claims, investigators said. They found an additional $61 million in questionable billing in cases where it wasn’t clear that the Medicare beneficiary had seen the referring doctor in the previous five years, raising questions about whether the prosthesis was medically necessary.

Industry officials say they are committed to battling fraud and the AP’s statistics simply show the march of progress.

“We have had a huge improvement in the quality of devices that we can provide, thanks to all the knowledge that has flowed from providing care to soldiers,” said Thomas Fise, executive director of the American Orthotic & Prosthetic Association, a trade group. “That technology has now become available, and patients believe they should be entitled to it, and who is going to tell those Medicare beneficiaries they are not entitled?”

“What the government got for their money was value-added,” said Tom DiBello, president of the group, which represents professionals who fit artificial limbs as well as manufacturers.

The AP’s analysis was done by Avalere Health, a data-crunching firm serving private and government health care clients. It looked at Medicare spending on 13 codes for different types of artificial feet that the program covers, many with multiple manufacturers. The analysis suggests the sharp rise in spending is mainly due to a shift in the types of prosthetics being given to Medicare beneficiaries, from ones that cost several hundred dollars to more sophisticated types that run in the low thousands.

Medicare has started covering a computer-controlled ankle/foot that costs $15,000, about as much as a compact car. Some major private insurers still consider it experimental and do not routinely cover it.

Several doctors were surprised by the findings.

“The data are surprising because of the large increase over a short period of time,” said Dr. David Armstrong, a professor of surgery at the University of Arizona and diabetes expert who directs the Southern Arizona Limb Salvage Alliance.

Armstrong wonders if the dazzle of technology is the issue for some practitioners. “They can lose the forest for the trees and focus more on a high-end device because it’s high-end, rather than specifically on function for the patient,” he said

The AP’s data analysis showed a nearly threefold increase in Medicare coverage for one model of foot prosthesis that features a shock absorber and costs about $6,500.

That seemed puzzling to Gilmer. His clinic had recently fitted a patient with that same kind of foot. But the patient is in his 20s and rides ATVs, plays basketball and works on cars.

“Most of our Medicare patients are not going out playing hoops every day,” said Gilmer. Fitting a patient is an individualized process that takes into account many factors, not only physical activity.

Avalere senior vice president Nora Hoban said the data raise questions that need to be answered by further research.

Medicare spokesman Cook said the government is cracking down on fraud involving artificial limbs, saving taxpayers $867,000 in the past year.

But Medicare was unable to provide the AP the ages of beneficiaries who received the different types of artificial feet or the states where they live. Those two pieces of information could help start to find answers to the puzzle.

Officials acknowledge widespread deficiencies in documentation of medical necessity for all kinds of equipment, but they are concerned that tightening requirements could restrict access for seniors.

“We are committed to reducing improper payments and fraud, while ensuring that Medicare beneficiaries have access to the care and services that they need,” said Cook.

The inspector general’s report recommended that Medicare revise a scale of functional activity levels that clinicians use to help determine what kind of artificial limb is appropriate for a particular patient, based on that individual’s lifestyle. It said definitions of the patient’s potential for rehabilitation should be clarified.

“These changes would help ensure that prostheses are matched to beneficiaries’ needs and that (Medicare billing contractors) can assess the medical necessity of these devices,” the report said.

Meanwhile, the rate of diabetes-related foot and leg amputations continues to fall, due to better patient care. Among the Medicare population, it declined 66 percent from 1996-2008, according to the Centers for Disease Control and Prevention.

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President Obama unveiled a $3.8 trillion budget request Monday that hikes taxes on the rich, spends new money on infrastructure and education, but does little to reform the entitlement programs that pose the biggest long-term threat to the federal budget.

"We built this budget around the idea that our country has always done best when everyone gets a fair shot, everyone does their fair share and everyone plays by the same rules," Obama said in his budget message.

But the budget forecasts a deficit for fiscal year 2012 that will top $1.3 trillion, before falling in 2013 to $901 billion, or 5.5% of gross domestic product.

The deficit projections, which have hovered near $1 trillion for each year of the Obama presidency, mean that Obama will not satisfy his 2009 promise to halve the deficit by the end of his first term.

White House officials described the budget as a continuation of two major speeches given recently by the president — one in Kansas where he promised Americans a "fair shot," and last month’s State of the Union.

The budget also offers fresh insight into how the White House plans to comply with last year’s Budget Control Act, which allowed Congress to raise the debt ceiling in exchange for caps on discretionary spending accounts.

Many of the high profile recommendations made in the budget were first floated by the administration last year as part of a deficit reduction plan rolled out in September.

Spending: The administration is proposing a series of investments focused on infrastructure, education and domestic manufacturing, including old favorites like $30 billion to modernize schools and an additional $30 billion to retain and hire teachers and first responders.

One key element of that plan is a six-year proposal to spend $476 billion on surface transportation, a big increase from current levels, and much more than other proposals lawmakers are considering.

At the same time, the White House had to comply with the spending caps enshrined in the Budget Control Act, which total in the neighborhood of $1 trillion in discretionary spending over a decade.

That means many programs will see their funding cut.

"Every department will feel the impact of these reductions as they cut programs or tighten their belts to free up more resources for areas critical to economic growth," Obama wrote.

Discretionary spending is projected to fall from 8.7% of GDP in 2011 to 5.0% in 2022.

The budget details 210 places where programs will be cut or eliminated, for savings of $24 billion in 2013 and $520 billion over a decade.

For example, the budget eliminates an Air Force satellite system that is "no longer needed to meet mission requirements."

And the budget proposes consolidating the Bureau of Public Debt and the Treasury’s Financial Management Service.

The president would also like to cut some mandatory spending, including select farm subsidies and federal employee retirement and health benefits, for savings of $217 billion over a decade.

Military spending will be reduced. The Pentagon plans to spend $487 billion less over 10 years, a course that Secretary of Defense Leon Panetta has already laid out in some detail.

But even with some cuts, annual deficits are still projected to be more than $500 billion every year for the next decade, and the budget would add $7 trillion to the debt held by the public between 2013 and 2022.

Taxes: The budget proposes a tax hike of $1.5 trillion, which includes a provision that will allow the Bush tax cuts to expire for high-income earners, a long-held Obama position 100% free credit score.

Obama would like carried interest to be taxed as ordinary income, which means money managers would pay more than double the rate they currently pay on a portion of their compensation.

‘Dirty Harry’ weighs in on deficit

The budget also incorporates the Buffett Rule, a guideline to ensure that the wealthiest do not pay a lower overall tax rate than those who earn substantially less money.

Specifically, no household making more than $1 million will be a allowed to pay less than 30% of its income in taxes.

It also calls for a year-long extension of the payroll tax cut and unemployment insurance.

In addition, the White House wants to reform the individual tax code in a way that "eliminates inefficient and unfair tax breaks for millionaires while making all tax breaks at least as good for the middle class as for the wealthy."

On corporate taxes, details are scarce, but administration officials said that the president will unveil a plan to reform the corporate tax code later this month.

Entitlements: Because the president’s budget does little to address how to curb the growth in entitlement spending, it’s unlikely to stabilize deficits beyond the next 10 years.

National debt: The five-minute primer

The budget would cut more than $360 billion from Medicare, Medicaid and other health programs over a decade. But that’s a drop in the bucket when compared to the rapid expansion of costs expected for entitlement programs.

"While [Obama’s] budget stabilizes debt over the next decade, the real problem arrives thereafter, as entitlement costs spiral out of control and revenues are inadequate to deal with a wave of retiring baby boomers," Pete Domenici and Alice Rivlin, who led their own debt task force, said in a joint statement.

Of course, proposing significant cuts to Medicare and Social Security during an election year is a politically risky move, but by not saying much on the issue, the White House opened itself to criticism.

House Appropriations Committee Chairman Hal Rogers took Obama to task on Monday, saying the proposal "falls exceptionally short" on entitlement spending reform.

"It is imperative that both the President and Congress put greater focus on addressing the exploding costs of these programs," Rogers said. "Without meaningful action in this area, the nation’s debt and deficit crisis will continue, increasing the risk to our nation’s financial and economic future."

What’s next: Obama’s budget request is essentially a blueprint of his fiscal priorities — the programs he would like to fund or cut, the new investments he would make and how he would pay for it all.

But the request is just that — a request. And it’s one that Congress can accept, reject or modify.

Even if Obama’s budget is adopted — which it won’t be — the estimates for deficit reduction may or may not pan out depending on how close to reality the administration’s forecasts for unemployment, interest rates and economic growth prove to be.

In any case, Obama’s 2013 budget is only the first step in a convoluted process that involves no less than 40 congressional committees, 24 subcommittees, countless hearings and a number of floor votes in the House and Senate.

If all goes well, a formal federal budget for government agencies will be in place by Oct. 1, the start of the 2013 fiscal year. 

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South Africa is planning a

It was just last summer that the Dow Jones industrial average shed 2,000 points in three terrifying weeks. Investors had a host of things to worry about, including the possibility of another recession.

Now the Dow is within reach of the rarefied 13,000 mark _ a level it hasn’t seen since May 2008, four months before the financial system almost came apart.

A strong one-day rally _ caused by a deal on bailout money for Greece, perhaps, or an unexpectedly positive economic report _ could put it over the top.

What’s more, the average is just a 10 percent rally from an all-time high. And 10 percent rallies can happen fast these days.

The stomach-turning summer is a bad memory. Europe appears to be getting its act together, last summer’s downgrade of the U.S.’ credit rating was quickly forgotten, Washington is mostly behaving, and recession fears are gone.

“There are signs that the economy is getting back on its feet and the market is reacting to that,” says John Prestbo, executive director of Dow Jones Indexes. “The mood is just better in this country than it has been for a while.”

On Wall Street, too. The Dow traded Tuesday at 12,878, a 21 percent rally from Oct. 3, its low point for last year. In January, the average rose more or less in a straight line and added 3.4 percent, its best start to a year since 1997.

From here, the record is tantalizingly close _ 14,164.53, reached Oct. 9, 2007, when the investment houses Bear Stearns and Lehman Brothers still existed and the unemployment rate was 4.7 percent.

A 10 percent surge may seem like a lot, but it’s really not. The Dow has gained almost 15 percent since Nov. 25, just 10 weeks ago.

Though there’s a long way to go to get the country back to economic health, there are pockets of encouragement. Unemployment is still 8.3 percent, but it’s the lowest since February 2009. Economic output grew every quarter last year.

Corporate earnings growth has slowed, but analysts think it will pick up again later this year. Investors, always wary of uncertainty, may even be encouraged by some clarity in the Republican presidential nominating race.

Investors are no longer just trying to stem their losses, says Mark Lehmann, president of JMP Securities in San Francisco: “They’re playing a little offense. Six months ago, they were playing defense.”

There’s evidence that the rally has room to run. In a popular measure of how expensive stocks are, the 30 companies that make up the Dow are trading at an average of about 13 times their annual earnings per share.

The last time the Dow was at 13,000, in May 2008, stocks were trading for about 15 times earnings. Stock-market research firm Birinyi Associates estimates Dow stocks have traded at an average of 16 times earnings over the past two decades.

The fire-sale discounts have already come and gone, though. Those were back in early 2009, when the Dow bottomed at 6,547.05, its Great Recession low _ a little more than half the level now. Back then, Dow stocks traded at nine times earnings quick payday loans.

Not everyone believes the rally will last. Joe Gordon, managing partner at Gordon Asset Management in North Carolina, is dubious. He cites the unresolved European debt crisis, the U.S.’ historically high national debt and the millions of people who have given up looking for work, part of the so-called underemployed.

“This is like drinking a lot of coffee in the afternoon,” says Gordon. “It perks you up, then once it fades 45 minutes later you’re even more tired.”

Another wrinkle is that the Dow tracks just 30 companies, so it doesn’t take the full pulse of the market. The Standard & Poor’s 500, with its much larger roster, is still 16 percent away from its all-time high.

“It’s 30 stocks,” says Rob Leiphart, an analyst at Birinyi. “It doesn’t give you a representation of anything.”

But despite its size, the Dow is the market gauge that penetrates the public consciousness, generating headlines and water cooler buzz more than the less publicized S&P.

That’s important because the stock market, even if it has no direct bearing on the fundamentals of the economy, is a psychological motivator of spending because of something known as the wealth effect.

Even people with no stock investments will let their decisions be influenced by swings in the Dow. When it’s up, we tend to feel richer and spend more. When it’s down _ think back to the 500-point daily declines of 2008 _ we tend to feel poorer and spend less.

There’s good reason the Dow has pull over the financial mood of the country. Its 30 stocks account for 25 to 30 percent of the market value of all U.S. public companies, and about 40 percent of the dividends, Dow Jones Indexes estimates.

“Nothing of substance can happen in this economy without these companies feeling it,” Prestbo says.

A handful of companies have an outsized impact on the index. The Dow is a price-weighted average, which means companies with more expensive stocks have more power to drive the average higher or lower.

If you invest $30 in a mutual fund tracking the Dow, you don’t have a dollar riding on each company. Four times as much of your money would end up on Home Depot, which is trading around $45, than Alcoa, trading around $11.

IBM, the highest-priced stock in the Dow, had a giant influence last year. The Dow rose 5.5 percent in 2011, but without IBM it would have risen only 3.4 percent, according to Leiphart’s calculations.

If you were to cut out the next three stocks on the list, McDonald’s, Chevron and ExxonMobil, then the Dow would have finished down 0.25 percent for the year.

The flip side is that stocks like Chevron, Exxon Mobil, Microsoft and Intel trade well below the 13 times earnings for the full Dow. If they catch up, it could be enough to power the average to a record.

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Hong Kong will spend nearly HK$80 billion ($10.3 billion) to bolster growth as the government forecasts the weakest expansion since 2009 on a

The U.N. nuclear agency is including two senior weapons experts on its next mission to Tehran in an unusually clear statement on the team’s prime focus _ wresting information from Iranian officials about suspicions the country has secretly worked on atomic arms.

Iran has flatly refused to discuss such allegations for more than three years, saying they were based on phony intelligence from the U.S. and others seeking to harm the Islamic Republic.

But diplomats on Friday told The Associated Press that the weapons experts were part of the U.N team and that Iran had accepted their inclusion after some initial resistance. That suggested that the Islamic Republic was being more conciliatory on the issue of secret weapons work than usual as the International Atomic Energy Agency mission prepares to fly from Vienna to Tehran Saturday.

All six diplomats interviewed said Tehran had not committed to discussing the issue. But three of them added that Iranian officials indicated openness to talking about all topics during the IAEA mission that ends early next week _ a departure from standard reluctance by Tehran to exclude give-and-take on the arms allegations.

None of the diplomats expressed confidence of a breakthrough. But the Iranian stance at least allows the mission to have some home of making a dent into Iran’s wall of silence about its alleged clandestine nuclear weapons work.

Any progress on the issue would be significant.

Tehran has blocked IAEA attempts for more than three years to follow up on U.S. and other intelligence alleging covert Iranian work on nuclear arms, dismissing the charges as baseless and insisting all its nuclear activities were peaceful and under IAEA purview.

Faced with Iranian stonewalling, the IAEA summarized its body of information in November, in a 13-page document drawing on 1,000 pages of intelligence. It stated then for the first time that some of the alleged experiments can have no other purpose than developing nuclear weapons.

Iran continues to deny the charges and no change in its position is expected during the Tehran talks with IAEA officials. But even a decision to enter a discussion over the allegations would be a major departure from outright refusal to talk about them.

The diplomats said that the IAEA team was looking for permission to talk to key Iranian scientists suspected of weapons work, inspect documents relating to such suspected work and get commitments for future visits to sites linked to such allegations.

As most often the case, the IAEA team is headed by Herman Nackaerts, the chief agency official in charge of the Iran file _ but the makeup of the rest of the team reflects the importance attached by the agency to the trip.

Two diplomats said Friday that nuclear weapons experts Jack Baute of France and Neville Whiting of Britain would accompany Nackaerts.

While both fulfill IAEA functions not directly related to nuclear arms research, they were connected to their nation’s weapons programs before they came to the agency.

One of the diplomats _ who is familiar with the thinking that went into setting up the mission _ said their inclusion was meant to send a clear signal to the Iranians. He, like the five other diplomats, asked for anonymity in exchange for discussing privileged information,

Also on the team is Rafael Grossi, IAEA chief Yukiya Amano’s right hand _ another indication of the importance the agency has attached to the trip.

The three-day visit comes as anxiety grows daily about Iran’s nuclear capacities _ and what it plans to do with them.

Since the discovery in 2002 that Iran was secretly working on uranium enrichment, the nation has expanded that operation to the point where it has thousands of centrifuges churning out enriched material _ the potential source of both nuclear fuel and fissile warhead material.

Iran says it is enriching only to generate energy. But it has also started producing uranium at a higher level than its main stockpile _ a move that would jump start the creation of highly enriched, weapons grade uranium, should it chose to go that route. And it is moving its higher-enriched operation into an underground bunker that it says is safe from attack.

Israel in particular is concerned by Iran’s expanding enrichment capacities _ and increasing evidence of secret nuclear weapons work.

Israeli Defense Minister Ehud Barak said Friday the world must quickly stop Iran from reaching the point where even a “surgical” military strike could not block it from obtaining nuclear weapons.

Amid fears that Israel is nearing a decision to attack Iran’s nuclear program, Barak said tougher international sanctions are needed against Tehran’s oil and banks so that “we all will know early enough whether the Iranians are ready to give up their nuclear weapons program.”

The United Nations has imposed four rounds of sanctions against Iran, but veto-wielding Russia and China say they see no need for additional punitive measures. That has left the U.S. and the European Union to try to pressure other countries to follow their lead and impose even tougher sanctions.

“We are determined to prevent Iran from turning nuclear,” Barak told reporters during the annual meeting of the World Economic Forum.

“It seems to us to be urgent, because the Iranians are deliberately drifting into what we call an immunity zone where practically no surgical operation could block them,” he said, alluding to increased Iranian efforts to move their enrichment work deep underground.

Separately at Davos, U.N. Secretary General Ban Ki-Moon urged a resumption of dialogue between Western powers and Iran on the nuclear issue. He said Friday that Tehran must comply with Security Council resolutions and prove conclusively that its nuclear program is not directed at making arms.

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George Jahn can be reached at http://twitter.com/georgejahn

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Turkey stands by its forecast of 4 percent growth this year, Deputy Prime Minister Ali Babacan said, dismissing International Monetary Fund projections that the economy may barely expand.

The global environment is uncertain and there are major decisions to be taken in developed nations in the next four or five weeks that could change the outlook completely, Babacan said in a televised interview from Davos today. The IMF is

China is allowing the nation

Rescue crews say a rescue operation on a cruise ship that ran aground and capsized off Tuscany has been suspended after the Costa Concordia shifted a few inches (centimeters) in rough seas.

Fears are mounting that if the ship shifts significantly, the 500,000 gallons of fuel may begin to leak into the pristine waters around the island of Giglio.

Fire department spokesman Luca Cari said the ship had shifted a few centimeters vertically and horizontally Monday because of the seas. He said an underwater search for 16 people still unaccounted for from the 4,200 on board was suspended immediately.

Six people were killed when the ship ran aground Friday. Costa has said the captain, who has been jailed, made an unauthorized deviation from the ship’s planned course.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

ROME (AP) _ The captain of the cruise ship that capsized off Tuscany made an unauthorized, unapproved deviation from its programmed course, a “human error” that led to the grounding of the vessel, the chief executive of the ship’s Italian owner said Monday. At least six people died in the incident.

The comments from Costa Crociere chairman and CEO Pier Luigi Foschi ramped up the pressure on the captain, who already is under investigation by authorities for suspected manslaughter and as well as allegations he abandoned ship before the passengers were safe, violating the Italian navigation code.

The Costa Concordia ran into a reef Friday night and capsized into the port area of Giglio, sparking a frantic evacuation of the 4,200 people onboard. Coast Guard officials have expressed concern that the ship might slip off the rocks where it is currently perched.

On Monday, the rescue operation was called off as weather worsened and a sixth body was found. Foschi said it wasn’t because the ship had shifted but because divers heard “sounds” coming from inside and didn’t know what was causing them. Sixteen people remain missing Payday Loan for Bad Credit.

Foschi said the company, which is owned by the world’s largest cruiseline, Carnival Corp., stood by the captain, Francesco Schettino, and would provide him with legal assistance. But he said the company disassociated itself from his behavior.

Costa ships have their routes programmed, and alarms go off when they deviate, the chief executive said in a press conference.

“This route was put in correctly. The fact that it left from this course is due solely to a maneuver by the commander that was unapproved, unauthorized and unknown to Costa,” he said.

Schettino has insisted he didn’t leave the liner early, telling Mediaset television that he had done everything he could to save lives.

“We were the last ones to leave the ship,” he said.

Foschi said the liner had passed all safety and technical tests in its 2011 evaluation. He added that the company’s main concern was the safety and well-being of the passengers and crew, as well as to ensure fuel doesn’t leak out from the upended hull into the pristine waters off the island of Giglio.

There were 500,000 gallons of fuel on board, in 17 separate tanks, Foschi said.

“There are no signs of pollution” to date, but officials are on high alert in case the ship suddenly shifts due to worsening weather conditions, Foschi said. Sensors have been put in place to track the movements of the ship.

Questions have been swirling about why the ship had navigated so close to the dangerous reefs and rocks that jut off Giglio’s eastern coast, amid suspicions the captain may have ventured too close while carrying out a maneuver to entertain tourists on the island.

Residents of Giglio said they had never seen the Costa come so close to the dangerous “Le Scole” reef area.

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