The Amazing Maze of US Health Care

Hoops

The recently passed Patient Protection and Affordable Care Act (PPACA) does much to promote long term reform of the way physicians are paid for their services.

But could something be done now to simplify the system for both patients and their doctors?

Many health care policy experts tout the current payment system as a major contributor to distorted incentives within the current health care delivery system

Fee for service reimbursement promotes more procedures, surgeries, images, etc. at the expense of patient listening time.

So the PPACA implemented a number of pilot programs to promote efforts to develop more global approaches to reimbursement.  I have discussed some of these in previous posts.

Payment reform now

But there may be intermediary steps that can be taken now to simplify a system that makes sense to no one; sometimes not even the insurers who administer them.

Example one – payment confusion.

A patient, someone I know well, gets a referral from their doctor for physical therapy.  Since I have had some experience with physical therapy and with health insurance, she asks my opinion.  I advise her to go on line to her insurance carrier’s webs site and check if certain physical therapists are in her network.  She does that and identifies a physical therapists in the network and close to her home.

Again, acting on my advice, she calls in advance to confirm that the practitioner still is contracted with this insurance carrier.  She is reassured and schedules a series of appointments.  Several weeks later she gets an Explanation of Benefits (EOB to the cognoscenti) and the insurer has paid nothing.

Her immediate reaction is to cancel all of her remaining appointments.  I persuade her to contact customer service and she if she can get a better explanation than that offered by her Explanation of Benefits.  She is told that the doctor is an out of network doctor and consequently she is liable both for an out of network deductible and for “balance billing” – charges over and above the amount negotiated and approved by the insurance carrier.

“How can this be?” she says to me.  “I looked the provider up on the carrier’s web site, I called the therapist, I don’t understand.”

We got on the phone together and I was able to learn from the customer service agent that this therapist was, in fact, signed up as an HMO provider, a PPO provider, but not as an “Open Access” provider.  Many carriers have developed “open access” networks that are less restrictive than the traditional HMO networks.

The patient contacted the therapist who was more than willing to clear this administrative oversight.

But why should she?

This was a small physical therapy office with only two full time professionals.  They need to hire a support staff that will keep track of all of these different provider reimbursement agreements for each of the countless insurance carriers that she may or may not encounter.

Each reimbursement arrangement will have its own peculiarities, its own administrative procedures and its own customer service contacts.

For whom does this make sense?  Certainly not the patient and certainly not the provider.  Yet, isn’t that who this system is supposed to serve?

Example two – payment confusion

A patient goes for his annual heart check up with the same practice he has always used.  Only this time, the bill is not paid in full as it has been in the past.

The initial inquiry to customer service yields a response similar to patient one – this is an “out of network” provider and the patient must pay the out of network deductible.  Further probing by me elicits some additional information.  This practice is a “participating” provider, but not a “preferred” provider”.  This is more than a bit confusing, because this member has always had PPO coverage.  PPO means Preferred Provider Organization.  What is going on?

What changed is the patient.  He got older, he retired and he enrolled in Medicare.  He still retained the same insurance.  He is one of the lucky few who have employer sponsored health insurance as a retiree.

But some clause somewhere in those provider reimbursement agreements means that the same insurance paid when he was under 65, but not over 65.

A better approach

It is time we developed a single reimbursement methodology for all providers.

That does mean that all providers get paid the same.

It does mean that each provider is paid the same amount regardless of who he or she treats.  Within that system, there can be different degrees of patient responsibility for different groups.

The system may decide that a provider in a rural area may get paid more or less than a similar doctor in an urban area.  It would endeavor to pay those providers with better performance more than those who could not meet the outcome targets.  There could be many other differentiators but one theme will prevail – doctors will know and understand the system they are getting reimbursed by.  And it will not inconvenience patients.

Doctors can opt out of the system, but they cannot pick and chose insurance carriers.  If they are outside of the system their patients will be 100% responsible for all expenses they incur.  The insurance carriers will have no responsibility.

That is the kind of payment reform that would make a real difference.

Photo Credit: Flickr, The Smithsonian Institute

There is nothing simple about our health care maze.  Fixing it is not easy.

I prefer to look for the simple.  The complexity will evolve naturally.

Congress prefers to start with the complex and make it more so.

Spreading the medical risk

There  are two major challenges to fixing the customer side of the health care mess – spreading the medical risk and spreading the financial costs.

Spreading medical risk requires that everyone be in the system.  That spreads medical risk evenly between the sick and the healthy.  That can be accomplished by a system of automatic eligibility or a system of required enrollment.

Automatic eligibility describes a single payer system.  All citizens are enrolled by virtue of their citizenship.  To draw from known models, automatic enrollment describes Part A Medicare, Department of Defense medicine, and to a lesser extent, the Veterans Administration.

Funding for those programs is separate from enrollment and may or may not rely on direct participant financing.

A system of mandatory enrollment implies a system of mandatory participant financing.  That is where we bump into the second challenge.

Spreading the financial costs

How do we transfer money from those who have it to those who need it? Read the rest of this entry »

Art by donna K mcgee

How many health plans have you belonged to?

If you are old enough to read this, you are the exception if you can count them.

Because you weren’t paying attention before adulthood, we will ignore the number of times you changed health plans as a child.

Maybe you are one of those very few employees who has stayed in the same job your entire working career.  Even then, your employer has most likely changed health plans several times during your career.

And then you will retire.

How many health plans may you encounter during your life time? Read the rest of this entry »

Our plan just completed its annual open enrollment.  Members are permitted to change medical or dental plans; to add or remove dependents, and change life insurance options.

Open enrollments highlights certain flaws in our current system.

The logic of an open enrollment is compelling.  The object of any insurance is to spread the cost of any risk over time and over as many people as possible.  Open enrollment helps to spread the risk over time.

The risk of health care is different than other risks that we insure against.

We buy life insurance to insure against death; auto insurance to protect against an automobile accident; homeowners insurance to shield against damage to our home.

Those hazards (the technical term) generally occur without warning.  No one is likely to approach their insurance agent to buy auto insurance because they anticipate an auto accident in the near future.

Illness, on the other hand, can offer some warning.  Someone may experience symptoms and has not seen a doctor.  The doctor may have recommended expensive surgery.  Or maybe it’s just a young couple planning to start a family.

Open enrollment is the only opportunity that insurers have to spread risk over time.  By insisting that people enroll only during a specific time period, the insurer reduces the risk that someone is only enrolling because they know they have an approaching medical expense.

It may seem unfair to the person with an immediate and pressing need.  But to the others in the group who ultimately foot the bill, it makes perfect sense.  It is one reason why a mandate – an employer mandate or an individual mandate – makes sense.

Medicare has its open enrollment rules.  Their annual open enrollment for Medicare Part B is from January through March each year and is not effective until July 1 of that year. Read the rest of this entry »

On Friday, I received an e-mail from someone who had just visited with several Capitol Hill staffers on health care reform. He was discouraged with the general response that health care reform was done – there was no room for new ideas.

He was promoting EMBRACE, the plan offered by the Healthcare Professionals for Healthcare Reform

Even more discouraging was the perception that Congress had a busy agenda and they were just eager to get this issue behind them.  In addition, he was disheartened by the lack of provider unity on this topic.

He made the comment in his e-mail, “This isn’t health care reform, it’s insurance reform.”

I beg to differ. It is not insurance reform; it is an insurance industry bailout. It is a status quo bailout. Read the rest of this entry »