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HEALTH PLANS/CONSUMERS/POLICY: Administrative costs–bad and will get worse with CDHPs

PNC Bank has a new survey out saying that 30% of all health care costs are to do with administration—actually it may be more than that if you believe the study in Health Affairs that said it was 20-22% of all provider costs, when the public provider payer segment is keeping an additional 3–20% of all the dollars too. I think that PNC is trying to promote HSAs et al, and perhaps wants to suggest that this will solve the administration problem. As I’ve been saying for a while, the current set up of CHDPs just means that instead of chasing down health plans for the money, providers will be turned into consumer collection agencies.

And PNCs own survey shows that most providers agree with me:

Nearly three-quarters of hospital executives surveyed (72 percent) expect high deductible health plans, which require consumers to pay more upfront costs for care out of their own pockets, to add another layer of complexity to the claims, billing and payment process.

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Waynejoe blowJohn R. GrahamPetermatt Recent comment authors
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Wayne
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Putting the Federal Government in charge of all our health care is a tremendously bad idea. The comparisons of admin costs for private and public programs is grossly distorted in most reports. The AMA knows this better than most. If you can ,read what the Doctors themselves have to say at http://www.ama-assn.org/ama1/pub/upload/mm/478/admincosts.pdf

joe blow
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joe blow

“A recent research trip to a local NJ Minute Clinic in a CVS store showed that the charge for most of their procedures is $59, and that’s to see a nurse practitioner, not a doctor.”
Sure but their diagnostic tests and treatment plans are EXTREMELY LIMITED. Their entire portfolio of things they are allowed to diagnose/treat is less than 40 items.

Peter
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Peter

Barry, my memory of what he said is correct, but what he meant or meant to say may be another thing. I would be interested to hear from docs out there and see how many people and how much time, their’s and their staff, devote to insurance/collections.

Barry Carol
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Barry Carol

Peter, I don’t think five billing people per provider is correct. In the busy group practice I go to in NYC, 5 or 6 administrative support people handle all of the administrative work for the six doctors and one NP in the practice. A specialist I see, who is in solo practice, has two administrative people and one clinical assistant. Perhaps Eric Novack and some of the other docs on the blog can tell us how many administrative people they need to support them and how much of the support staff’s time is spent on billing and related matters. An… Read more »

Peter
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Peter

All this talk about deductibles and co-pays is about insurance and not healthcare. It’s about restricting access and promoting insurance profits not promoting health. If we continue to be drawn into the “insurance” argument, as I’m sure is what the insurance industry wants, then we will never come up with an innovative and completely new way of doing the things that KSJ longs for. KSJ, there is a doctor in a local community here that got out of the insurance game all together (direct pay). He is able to charge $45 per visit and has suffered NO decrease in income.… Read more »

KSJ
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KSJ

With gjudd I agree. Consider that the deductible is an arbitrary amount paid during an arbitrarily defined time period, either of which may be varied. Like auto insurance, health insurance could be recast to pay for ‘event occurrences’; in other words, the patient pays out of pocket at the time of service for maintenance care, with only catastrophic care (being defined by the market) being insured. One could readily envision adapting the current model of HSA’s to eliminate bean-counting hassles. Let’s say my deductible is $3500. I, or my employer, or whoever (the government?!?), deposits $3500 into my ‘prepaid’ account… Read more »

gjudd
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gjudd

If we’re going to have collections at point of care, then there will be administration if only to count collections against a deductible or from an account. If we’re going to have NO collections at point of service, then someone will have had to organize the full pre-payment of all services (e.g KP, the NHS). If you can think of another solution to this either/or you’re smarter than me. Matthew, we can leave aside the irrelevant issue of “who’s smarter” – which, parenthetically, seems to hang you up with a number of your correspondents – and return instead to the… Read more »

John R. Graham
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This is a real “which comes first, chicken or egg” problem and I don’t know who will succeed in making a tasty omelette out of it. However, there may be something else going on with high-deductible health plans (HDHPs). As Matthew Holt points out above (and I had a similar experience with hernia day surgery) even if you have a HDHP your insurer has no interest whatsoever in facilitating your payment at the time of service. (Perhaps this is because they make so much money from the float they just don’t understand why you’d want to pay up front. “Certainty”… Read more »

KSJ
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KSJ

I think we all agree the core problem with the present system is efforts to curb healthcare consumption have alienated or marginalized someone to the point the effort failed. Yet, there is little doubt in my mind that consumption by an individual who bears no burden of cost will always outstrip societal willingness to pay. So, limits can either be imposed on the individual (through the insurer, or the single payer, or some other ‘oversight agency’), or the individual can chose his/her own “cap”. These are the only choices… (or does anyone see another choice?) When it comes to routine… Read more »

Matthew Holt
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gjudd. If we’re going to have collections at point of care, then there will be administration if only to count collections against a deductible or from an account. If we’re going to have NO collections at point of service, then someone will have had to organize the full pre-payment of all services (e.g KP, the NHS). If you can think of another solution to this either/or you’re smarter than me.

gjudd
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gjudd

Since upwards of 90% of all healthcare is delivered (when measured by the encounter, not cost) in this setting, and much of it amounts to rather nominal expense, the insurer really ought not be involved at all, thereby eliminating a substantial amount the paperwork and overhead. KSJ nailed it, on 3/26/07 at 4:01:42 PM. How Matthew gets – enthusiastically! – from KSJ’s point to the virtues of a (presumably first-dollar, or approximating that) prepaid system escapes me: Down which KSJ leads the road to real prepaid care a la Kaiser, Canada or UK NHS with no mohney changing hands at… Read more »

Barry Carol
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Barry Carol

Seems docs and patients would benefit from billing only one insurer (single pay) with one set of rules that are the same for everybody. For docs, I think it depends importantly on the reimbursement rates which would be importantly influenced by government fiscal constraints generally and the inherent political limits on the level of coercive taxation that the society will tolerate. It could well be that docs would find themselves better off putting up with some added administrative hassle of dealing with a reasonable number of private insurers if reimbursement rates are better and limits on their independence and medical… Read more »

Peter
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Peter

By KSJ:
“I want to reiterate my contention that the current payment system must be scrapped, and a new sytem built.”
Seems docs and patients would benefit from billing only one insurer (single pay) with one set of rules that are the same for everybody.

Matthew Holt
Guest

Down which KSJ leads the road to real prepaid care a la Kaiser, Canada or UK NHS with no mohney changing hands at the point of care. Is Scott ready for that?

KSJ
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KSJ

Incidentally, to answer your question about why would the consumer ever want to assume responsibility for a task that’s been done for them in the past, I say – “let’s eliminate the task!” After all, I process claims on behalf of my patients as a courtesy, a customer service credit to stay on par with my competitors who do so. At one time, it was not too much to ask. It now is WAY TOO MUCH. Many clinics have more people processing claims and performing collections than they have actually delivering the care! Like Scott points out, “Why the H$%#… Read more »