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Happy Halloween

It’s the Price Stupid is the title of a seminal paper in Health Affairs that concluded that the United States pays more for health care and receives less than in other developed countries.

It is also a theme resurrected by Alec MacGillis in a Washington Post article last week.

The argument goes like this.   The United States pays more for health care than anywhere else on the planet, as much as 50% more than the average for other developed countries.

Yet we get fewer services;  fewer physician visits, fewer hospital admissions, fewer days in the hospitals.     It doesn’t take a Ph.D. statistician to conclude that we are paying too much per unit of care.

But does health care reform fix it?

To MacGillis cost controls means price control.

It is not clear to me that the higher unit cost in the United States translates into higher physician incomes.   How much of that higher unit cost is siphoned off by high administrative costs in terms of provider billing costs and insurance company overhead?  Someone needs to answer that question.

The Patient Protection and Affordable Care Act (ACA) does address cost control, but not in the way that MacGillis and others would prefer.    According to its critics, the ACA attempts to control costs by controlling the volume side of the equation; curbing the total costs by limiting the number of services that are performed.

Actually, what the ACA does is offer incentives to redefine the nature of the “service”.   Under the fee for service model, providers bill and are reimbursed for every single thing they do:   each lab test, each image, each physician office visit, each item of surgical or medical supply.

But just what is a health care good?

Is it the individual pieces, or is it a larger, more global, good:  an image, a surgery, an illness or injury, or the health of a population?

Providers will counter that each patient presents a unique set of symptoms and pre-existing conditions and that setting a fixed price for a specific episode of care, may encourage physicians to skimp on care.

And in the Lake Wobegon world of medical practice, every doctor treats patients that are above average in severity and complexity.

Imagine that cars were priced like medical services.   You might go to the dealer and find that your car is priced $2,000 higher.   Why?  Because while it was coming down the line, there was a breakdown and the extra time on the assembly line cost an additional $2,000.

Manufacturers build those mishaps into their price.   They do that because, unlike medical care, they know their customers will not pay for mistakes.   And by doing so, the pricing strategy is an incentive to the producer to reduce errors in the production process.

Paying for “call backs”

The same logic should apply to medical care.

A more global definition of medical service will offer incentives to deliver more efficient care.   Critics say it will encourage providers to deliver fewer services.

When I was younger and working as an apprentice refrigeration mechanic, the mechanic I worked with used to joke, “Doctors are just like us.   They are meat mechanics.   The only difference is that they get paid for their call backs.”

The idea behind global reimbursement strategies is to reduce the number of “call backs” by reducing the incentives.

The market imbalance

But there is one point to “the price is the problem” argument that is valid.   They all decry the “market imbalance”;  the increasing market power of the price setters and the weak and fragmented market power of the purchasers.   Those of us in the private sector are well aware that when government cuts its reimbursements, providers simply charge their private payers more.

If price is the problem, there can be only one workable solution – coordinated purchaser negotiations with the provider community.   That is sometimes called an all-payer system or, horror of horrors on this Halloween, rate setting.

In his blog post on the topic, Chris Fleming quotes a Feb 2010 on line Health Affairs article,

Berenson, Ginsburg, and Kemper concluded: “Unless market mechanisms can be found to discipline providers’ use of their growing market power, it seems inevitable that policy makers will need to turn to regulatory approaches, such as putting price caps on negotiated private-sector rates and adopting all-payer rate setting.”

I cannot think of a more compelling “market mechanism” than for the purchaser community to say to the provider community, “This is how much money we have to spend on health care.   You figure out how to deliver care efficiently to our population.”

That would be a global reimbursement strategy that just might challenge the role of the insurance company.

Photo credit:  JL McGee

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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

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A reader responded to my recent post about accountable care organizations with the question, “How do you measure quality in an accountable care organization?”

Good question!

In other words, if a health care organization is accountable, what do you measure and how do we know that this organization is actually responsible for what is measured?

Vitality as performance

These are the two top challenges with the accountable care organization initiative.  How does one define and measure the desired outcomes, and how does one define the group of practitioners that are responsible for those outcomes.

In my post I wrote  the following:

The study first grouped physicians and patients around their primary hospitals.  What it revealed is that when the hospital performed well, the physicians and physician practices affiliated with that hospital or hospitals also performed well.

Mortality – the ultimate performance measure

The reader appears to be asking:  How do you know that a hospital is performing well and how do we know that the physicians are performing well?

The study I referenced examined patient outcomes for patients with heart attacks, colon cancer, and hip fractures.

High-performing hospitals were defined as those in the lowest quartile on both risk-adjusted one-year mortality and risk-adjusted one-year costs (using standardized prices); low-performing hospitals were those in the bottom quartile on both measures, while the other three groups had intermediate levels of performance.

Mortality is clear.  It is a minimal expectation for a health care system that patients survive.  There are some who think it is not fair to judge any part of the health care system because people die.

Performance – can we do better than mortality?

Yet the United States is not in the top twenty countries for life expectancy, for infant mortality, for maternal deaths, for avoidable deaths.  There may be more sophisticated measures, but sophisticated sometimes just muddies the waters.

This study also used process indicators to measure performance for physicians and physician practices.  Did they do certain things that are normally associated with good medical practice and desirable outcomes? This study referenced the incidence of mammograms, diabetic screenings, and colorectal cancer screenings as its performance measures for ambulatory care.

The authors of this initial study make it clear that they are exploring a concept.  Is it possible to define a larger group of practitioners and attribute to that group certain performance measures?

They use available and admittedly crude claims data to make their case.  They concede that even with risk adjustment outcomes there may be inadequate adjustments for population health status and that more sophisticated multi-dimensional measuring tools need to be developed.

In a more recent article, Mark McClellan et al propose a list of more sophisticated performance measures.  They stage them as beginning, intermediate and advanced and group them into care coordination, care effectiveness/population health, safety, patient engagement, and efficiency.

It is all about mortality

Most of these more sophisticated “performance” measures are process measures that may help medical managers understand the connections between process and outcomes.  But how much do they contribute to understanding the health status of the patient population?

What really counts is whether people are living longer, healthier and more productive lives.  I see far too many people who are forced to retire early because the extra weight they carry has caused their knees to give out.  Or they have not managed their diabetes and have become insulin dependent, which disqualifies them for a commercial drivers license.

To achieve these outcomes requires a much more holistic approach to health care than our current fragmented and piecework approach.

Accountable organizations are a significant step in the right direction.  Are they enough?

The debate around performance measures and who is responsible for them is a huge step forward.

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Accountable care organizations.  Patient centered medical homes.  Episodes of care.

What do they have in common?

They each attempt to use payment incentives to encourage disparate practitioners to collaborate to achieve quality outcomes.

A common purpose

Socialized medicine is progress

The key word is collaborate.  Countless research indicates that when doctors work in teams, they achieve better results at lower costs.  It is this transition from doctor as solo practitioner to doctor as a member of a team that is the key challenge to reforming our health care delivery system.

This transition from solo craftsman to a member of a team is not new to the evolution of our economy.

It is how Karl Marx differentiated capitalism from the mercantilist economy that preceded it.  He called it the socialization of work.  It was this contradiction between the socialization of work and the private ownership of the means of production – capital –that was supposed to be resolved by the socialist revolution.

Karl Marx recognized that this socialization of work brought tremendous increases in productivity to the world economy.

The socialization of medical practice can improve the efficiency of health care delivery in the United States in the same way.  It can deliver better outcomes at a lower cost.

It is more than ironic that this feature of capitalism, the socialization of work, is criticized as if it is bringing this country closer to socialism.  If that is true, then the same critique could be leveled against Henry Ford’s assembly line.

Socialized medicine makes docs happy

There appears to be a key difference.  Marx argued that when the worker was separated from his own means of production he would be unhappy.  Marx called it alienation.  It was this alienation that would lead him or her to the path of the socialist revolution.

Doctors are not happy campers now.  The Washington Post reported on a survey of 119 clinics in which one-third were unhappy enough that they were likely to leave their jobs within the next two years.

But when doctors are working in a “medical home” they “turn frustration into excitement”.

The transition from piecework to team work is the key.  It is a transition away from a revenue focus to a focus on health outcomes.

Evolution as Revolution

Revolutions are not always sudden, violent and disruptive.  Revolutions can evolve.

The Patient Protection and Affordable Care Act provides for numerous pilot programs to encourage the development of patient centered medical homes, accountable care organizations, and the use of episodes of care.  These are not drastic measures.

They are intended to stir the pot to simulate the evolution of a more accountable, patient centered focus on health care outcomes.  The key ingredient in all of them is collaboration – the socialization of health care work.

If they succeed they will have achieved a revolution.

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The term medical home prompts associations with George Carlin and his comparison of baseball and football.

In baseball the object is to go home! And to be safe! – I hope I’ll be safe at home!

In football, we’re down in enemy territory

Reaching for the end zone

What would George offer as the medical counterpoint to “home”?  End zone might be a bit extreme.  But “homeless” could surely fit.

Can health care reform offer help for the medically homeless?

Safe at home

Medical home demonstration projectts

Shortly after the Patient Protection and Affordable Care Act was passed in March of this year, Mr. Vince Kuraitis, writing for the e-caremangement blog noted that the word “pilot” appears 80 times in the law, and the word “demonstration” is used 312 times

He might have also noticed that the term “medical home” appears 11 times,  exactly the same as “accountable care organization” that I discussed last week.

What is a medical home?

And why does it matter?  And more important – why is the medical home a challenge?

This is not a new concept.  The term has been around since 1967.   It is the concept about primary care that patients should have an access to a patient centered locus of care that is accountable for the long term health outcome of the whole patient.  It is supported by a wide array of  both physician specialty groups and health policy experts.  From the recent issue of Health Affairs

Most providers and patients, however, see the benefits of the patient-centered medical home as obvious. Some of this belief comes from evidence that primary care–oriented health care achieves better health outcomes at lower levels of spending. Some also comes from experimental and observational data showing that improved continuity and coordination of care lead to improved outcomes and reduced use of high-cost services. Finally, some comes from the simple intuitive knowledge that simply having a clinician who knows your name is a better method of providing primary health care.

The concept of medical home is so intuitive that one wonders how we drifted away from the concept.  But it is more than intuitive.  There is ample evidence that our specialty centric system is not producing good outcomes.  Areas of the country with higher primary care physician ratios have lower mortality rates, fewer ER visits, fewer hospital admissions, and lower costs.

And in comparison to Europe where there is much greater orientation to primary care, the United States has twice as many hospital admissions for diabetes and asthma.  And a person with diabetes is twice as likely to undergo an amputation as a diabetic in other developed nations.

That is a disgrace.

What is getting in the way?  Some argue a shortage of primary care physicians.  Some argue lack of an information infrastructure, others that primary care doctors treat too many patients to focus on individual patients.  Some quibble that there is insufficient research to support this or that fix.

My villain – fee for service reimbursement.  Physicians are paid for things they do, not for the results they achieve.  As I wrote last week, individual physician are not accountable for the long term outcome of their patients.  The medical home tries to fix that.

How do you fix it?

The simple answer is to pay primary physicians differently.  Differently includes more.  The pay gap between primary care physicians and specialty physicians is a huge deterrent to recruitment for primary care specialties.

Differently also includes paying for services not typically reimbursed in fee for service medicine – telephone and e-mail consultations, nurse practitioners and physician assistants, and support for information system restructuring.

A payment system that is tied to quality performance and not to specific tasks will encourage physician practices in the right direction.

But there are many barriers to transforming that system.  The current Medicare reimbursement methodology, and it is the dominant force in the market, is a zero sum proposition.  To add to primary care is to take away from specialists care.

But even if Medicare could find a way to change its reimbursement formula, there may not be dominant enough to move the market, especially among those practices that focus on younger populations.

But organizing physician practices around long term patient outcomes is too important a goal to abandon.

Hopefully the PPACA will be able to build some momentum around the patient centered medical home and refocus health care on the patient instead of the payment.

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The Society for Human Resource Management (SHRM)has approximately 250,000 members representing the varied disciplines and commercial interests within the  human resource profession.   As a benefits professional with expanded human resource responsibilities, I recently joined SHRM.

No one there {Photo by JLM}

So I was disappointed to learn that SHRM does not support the recently passed House health care reform bill, HR 3962, The Affordable Health Care for America Act.

My readers will know I consistently argue that relying on employment as the primary gateway to the health care system is outmoded and ultimately harmful to the American economy.   Part of that argument is because employer sponsored health care limits the flexibility of employer human resource policies and the mobility of the workforce.

Does SHRM share those views?

Apparently not.

What does SHRM say?

In some areas, the legislation does not go far enough, especially in the area of containing costs.  In other ways, the legislation would create new impediments for employers and employees.  For example, the House bill:

1. Does not include provisions to create greater availability to wellness programs for employees and employers.
2. Mandates that employers provide and pay for “qualified” health care coverage for their employees. If employers do not provide coverage – or do not provide the specific “qualified” coverage at an “affordable” price, as determined by the federal government, they must pay an 8 percent payroll tax.
3. Erodes the effectiveness of the Employee Retirement Income Security Act (ERISA) by applying state law to employer- purchased coverage in a health insurance exchange; prohibits post-retirement reductions of retiree health benefits by group health plans, unless reductions are also made to active employees’ health benefits; and requires employer-sponsored plans to meet detailed federal requirements.  These changes would likely result in additional costs and burdens on multi-state employers who could face different rules in different states.
4. Establishes a public insurance plan option that, as currently drafted in the House bill, could result in cost-shifting to private plans, potentially increasing costs for both employers and employees.

The Maze’s response

I.            Their first point is preposterous.  Employers don’t need federal legislation to promote wellness.  For people without health insurance, their pathway to wellness is health insurance.   And wellness alone is no substitute for health insurance.  What more evidence do you need than the story of the shooting in the health club in Bridgeville, PA this past August?  One of the victims had no health insurance.  Her health club membership did not protect her from the bullets of a crazy man.

In addition, workplace wellness is a growing phenomenon around the world and is not dependent on employer sponsored health insurance.

II.            It continually mystifies me why the business community opposes employer mandates.  Apparently the ideology of a “free” market trumps the common sense of a competitive market.  In a competitive market, everyone plays by the same rules.  In a free market, the winners make the rules.

III.            I am a bit more sympathetic to some of the arguments about ERISA.  As typical of any legislation, especially proposals that are as hotly debated as this one, legislators make decisions that reflect a poor understanding of the complexities of the issue.  If the choice were between this proposal and a single payer system, I would agree this solution is a poor one and should be rejected.  That is not SHRM’s viewpoint.

IV.            If SHRM were truly concerned about cost shifting, they should support a single payer system or at least an employer mandate.  They could support an all-payer methodology that the state across the river from their headquarters has.  Their opposition to the public plan option reveals their true loyalty to the insurance companies.

An alternative perspective

Why not promote policies that enable employer flexibility for all employers, large and small, and facilitate workforce mobility and development?

Ken Dychtwald was the keynote speaker at the recent annual conference of the International Foundation of Employee Benefit Plans (IFEBP).  He described how Americans are living longer and the impact thus is having on workplaces and employment practices.  Workers want to extend their working careers with educational breaks, career shifts, part time and part year work.  He did not address specifically the issue of universal access to health care.  But it is obvious that current employment based health insurance practices are a significant hurdle to adoption of the kind of workforce flexibility envisioned by Dr. Dychtwald.

SHRM should be looking to enable the future and not protect the past.

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How often have you heard the phrase, “The United States has the best health care system in the world.”?

What is wrong with that statement is the word “system”.

We could rephrase it – The United States can deliver some of the best health care services in the world (to those who can pay for it).

We could even argue  – The United States has some of the best health care systems in the world: the Mayo Clinic, the Veteran’s Administration, the Department of Defense.

But to assert that we have a system or that Americans (all Americans) receive the best care in the world is a stretch.  Why?

Over the last two weeks I wrote about our fragmented health care system and the closely related fragmented payment system.

I wrote about how patients are equally fragmented, migrating during their lives through several health plans, what I call patient delivery systems.

Why does this matter?

In most measures of health system performance the United States ranks embarrassingly near the bottom or at the bottom among industrialized countries.  From 2000 to 2009 male life expectancy fell six slots to 24^th in the world and female life expectancy fell from 28^th to 35^th.  Some would counter that life style, diet, or poverty had more influence on those drops than health care.

Isn’t that fragmented thinking?  If we had a health care “system” then it would take comprehensive approach to population health.

What are the incentives for doctors and hospitals?  Just as sunflowers follow the sun, health care providers, like the rest of us, follow the money.  And the money is paid for doing stuff, surgeries and tests, for example.  It is not paid for talking with or listening to patients, giving them lifestyle or treatment compliance assistance.

What are the incentives for patients?

Patients often lack the freedom to choose just any doctor.  Their incentive is to change doctors to conform with their current health plan rules.

It is not just patients who change health plans.  I have seen Participants change health plans during open enrollment, because a doctor they wanted was in the new health plan.  A couple of months later, they learn that their doctor is leaving that health plan over some real or imagined dispute.

Patients approach the delivery system through different health plans under different sets of rules regarding covered services, payments and bureaucratic processes. It’s not just that different patients are in different health plans.  The same patient migrates though different systems at different times.

Is it any wonder that doctors are confused and frustrated?

When doctors don’t know the rules

When doctors move in and out of health plan networks

When patients move through health plans – sometimes voluntarily, sometimes not.

When payment depends less on your own talents and more on who your patient is

When information systems are focused first on recovering payments not on coordinating care

When providers are rewarded for doing things, but not for advice, or just plain listening

Is it any wonder that care coordination should fall to the bottom of the priority list?  Not because its undesirable, but because its hard.

Is it any wonder that a long term perspective on patient care is totally lacking?

Disease management – an example

One of the burgeoning trends in the world of employer sponsored health plans are wellness programs and disease management programs. Wellness programs are  programs to promote healthy living.  Disease management programs are designed for people with chronic conditions such as asthma, hypertension, coronary artery disease or diabetes to help them better manage their disease.

Like many other ideas that originate in the United States, it has found strong adherents in other countries.  The Germans have incorporated individual and provider incentives for disease management in their recent reform efforts.  Curiously, the German word for disease management is Disease Management (Germans capitalize the initial letter of “their” nouns).

The logic  for such program is compelling.  That these are relatively new concepts may be puzzling.  But what is truly baffling is that they are not part of the package of services that is included with health care.  Our plan had the option of purchasing disease management services from our health plan, from our pharmacy benefit management firm, or from an independent specialty vendor.

Providers offer little resistance to disease management efforts. But why must they deal with a plethora of vendors?  Why aren’t they the organizing force behind disease and chronic condition management?

Geisinger Medical Center in my home state of Pennsylvania is often cited as model for delivering quality integrated health care to its community in north central Pennsylvania.  Ron Paulus, the Chief Technology Officer for Geisinger wrote in Health Affairs about its strategy for sustaining innovation.  In his conclusion he wrote:

Finally, for many organizations, the spread of value-enhancing collaboration and integration is restricted by regulations that preclude effective collaboration among payers in designing incentive systems and that impede collaboration between hospitals and physicians or among physician practices in a given region. Each payer has its own, largely fee-for-service, payment system—failing to align incentives to enhance value in the way that Geisinger has strived to do. New mechanisms that support collaboration and coordination of policies among private insurers and public programs are needed to achieve replication on a broader scale and sustainability over the longer term.

In other words even an integrated delivery system like Geisinger is thwarted in its efforts to enhance the value of health care by fragmented patient and payment delivery systems.

Does anyone think that health care reform will make the system simpler?

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Have you ever opened a bill from a doctor or a hospital and tossed it aside thinking, “They just haven’t received the insurance company payment yet.”  After the second or third notice, certainly after the notice from the collection agency, you might pay attention.

When health policy experts discuss payment reform, this is not part of the discussion.

But I would like to propose that payment reform include this simple principle – treat me; accept my insurance.

Have you ever called a doctor and asked whether they accept XYZ insurance.  “Yes, they politely tell you.  We accept all insurances.”  What they don’t tell you is that they accept it as partial payment on the total bill.

How do insurance companies determine payment?

When you get an Explanation of Benefits (EOB is the jargon term) it is broken down into the following pieces:

It is the Allowance and the non-covered amount that payment reform needs to focus on.

If a doctor accepts a patient they must also accept that insurance company allowance as payment in full.

No balance billing

That is the jargon for billing the amount that is not allowed by the insurance company.  Balance billing is why some people with insurance are forced to declare bankruptcy.  Insurance company policies typically have a maximum out of pocket amount.  Most of the health reform proposals include a maximum out of pocket amount.  The patient’s out of pocket expense is not to exceed that limit.  The catch is that most insurance company definitions of “Maximum Out of Pocket” only includes items 3, 4 and 5 on the above list.  It typically does not include balance-billed amounts.

Everyone would benefit

Medical service providers might chafe at this idea initially.  But one of the things that has doctors up in arms about the current system is the apparent unilateral authority of payers to set reimbursement levels.  Under this payment reform proposal, all carriers would pay the same rate for the same service to the same provider.  That is the trade off.

In addition, if benefit design was restricted to a handful of approved designs similar to the current regulations limiting Medigap policies, doctors would have a clearer understanding of what services were covered and not covered.  If a doctor then wanted to recommend a non-covered service, the doctor would know ahead of time that it is not covered and be able to explain to the patient the cost of the non-covered service.

Patients would benefit because they would understand their financial liability and should not be exposed to the risk of medical bankruptcy.

The economy would benefit.  Many have compared efforts at health care cost containment to squeezing a balloon.  Squeeze one area and it bulges in another.   Limiting balance billing clamps down on a significant bulge outlet.

A very typical example

As a benefit plan administrator one of the most vexing complaints we receive from members is the kind recently experienced by my own son. He was visiting friends out of town.  An unfortunate accident landed him in the hospital for two days.

He had good insurance (his own).  The hospital luckily was in the insurance company’s network.  But one of the service providers was not.  He was balance billed $600 for fees above the insurance company allowance.  He did not choose that provider.  The provider delivered its services within the network facility.  Attempts to negotiate the balance were futile and he had to pay the amount himself.

The current process is confusing to patients,  a headache for providers, and a huge administrative burden on the system.

Payment reform needs to eliminate balance billing.