Single payer or multi-payer?
For those who see the current multi-payer system as even a half-hearted nod to market efficiency, I introduce them to “other party liability”.
Other Party Liability is exactly what it says it is, someone else is responsible. To paraphrase Alfred E. Newman, “What? Me pay?”
The government prefers the term, “third party liability.”
Coordination of Benefits
In its most understandable form, two parents both have employment-based insurance. Both list each other as dependents on their own plans. In each case, the employer plan will be the primary payer for the employee and the secondary plan for the dependent.
And when both parents have coverage with the same claims payer/insurance company the process can work smoothly. Any unpaid balance on the primary plan can be submitted to the secondary plan for consideration.
But sometimes the secondary payer does not know there is another payer and pays a claim in full when it does not need to. Thus insurance companies have “other party liability” departments. Their task is to find out when there might be some one else to chase for payment.
Shell game losers – patients
From the narrow perspective of each payer, this process makes perfect sense. But from a macro-economic perspective it is a lot of money spent to slip the money from under one shell to another. It does nothing to improve the process of care.
In fact, the opposite can be the case when the patient is caught in this billing cross-fire.
This happens with workers’ compensation, personal injury lawsuits, and Medicare. In each of those there is a large bureaucratic apparatus, to chase or avoid other party liability.
Workers’ compensation pays for medical expenses related to a work related injury. It is not required to pay for other medical expenses. Likewise most insurance plans have exclusions for work related injuries. So insurance companies deny claims because they think it is work related. Workers’ comp denies claims because they think it is not work related. Lawyers are hired to get settlements for workers but avoid “subrogation”, another legal term which refers to the claim payer’s right to collect from a third party.
Medicare
A patient is eligible to enroll in Medicare. Her doctor, however, does not participate with Medicare. She clearly needs to enroll in Medicare, but she is planning a surgery and is not eager to change doctors and disrupt the continuity of care.
Another member thinks they have enrolled in Medicare, only to discover that they unwittingly checked the box indicating continued coverage under their employer plan. Medicare won’t pay because it thinks she has other primary coverage. Her Medicare secondary plan won’t pay until it receives an explanation of benefits from Medicare.
This is not an easy fix. Medicare rules require that if you miss the initial enrollment opportunity, you must wait until the general enrollment period, January to March of each year, to enroll and then it is still not effective until the following July 1st.
So the patient tells me that she will just have to avoid the doctor’s office until next July.
Because the patient did not understand the rules that govern which shell to look under to find where the money is hidden.
The money chase
Medicare spends lots of money chasing payments it made when it was not the primary payer. A 2004 study by GAO criticizes the process because it spends $1 for every $0.38 it collects. There have been several modifications to the law underpinning the Medicare secondary payer process since then, but I was not able to locate any evidence of an improved collection rate.
Meanwhile lawyers and others have built a small industry around this process.
As I indicated in a previous post, critics who think that malpractice claims contribute to excessive costs are looking in the wrong court room.
All to move money from under one shell to another.
Nothing to do with improving care.
There needs to be a system that holds only one payer responsible for all medical care. It does not matter if it is a work related injury, an automobile accident, or who the employer is or how old they are.
Health care should not be secondary to a shell game.
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