A message to health insurance CEOs, COOs, and CFOs. I believe there to be a fundamental disconnect between typical health insurer provider reimbursement strategies and the long term good of our healthcare delivery system and its financing.
Let me give you some examples which I know, as a former health insurer COO and CEO, to be true.
- Insurers still pay primary care physicians far less than most specialists. That perhaps was a function of the RBRVS system adopted by Medicare to “measure” the demands of specific physician activities and pay accordingly. Specialist activities were rated higher than primary care activities. They were deemed more complex, often involving surgery and fancy equipment with more training needed, etc. The gap between primary care and specialist reimbursement grew and grew. And what happened? Predictably, the best and brightest are avoiding low paying primary care. Consequences?
- Shortage and aging of primary care physicians who are needed to keep us from requiring the much more expensive specialist and hospital care
- Oversupply of specialists resulting in overuse, because if you build it they will come
- Keeping the focus on sick care, which is what most specialists specialize in, rather than well care
- Devaluing E&M (evaluative and maintenance) activity, which is the heart and soul of the practice of medicine, requiring observation, patient knowledge, and perception
- Not paying for needed counseling and monitoring, which means no one does it and there is no quarterback for a patient’s care
- Many hospice organizations provide acute care for terminally ill patients in a setting that is far more patient and family friendly than a hospital based ICU, and at tenth of the cost. What about this is there not to understand? And yet, many insurers (including Medicare) negotiate with hospice organizations exactly as they do with specialists and other providers, trying to achieve reimbursement at the lowest possible level, without thought to whether that makes overall sense. Consequences?
- Shortage of hospice acute care facilities
- Longer hospice eligible patient stays in hospital ICUs
- Bloated end of life expenses that could be mitigated
- Significantly worse patient experience
- Worse outcomes (and I’m not talking about death, but rather quality of life while still alive)
- Commoditization of acute care undifferentiated as to its cost
- Virtually the entire insurer response to behavioral health office visits and counseling is contrary to common sense and the good of the system (financially and otherwise) and its patients. Insurers squeeze office visit reimbursement, limit the number of office visits, and often resist collocation and integration of behavioral and physical health. They underpay psychologists and clinical social workers, the front line of counseling. They overpay psychiatrists, who largely are prescribers of meds. Consequences?
- Mental health parity remains largely a myth in reimbursement, despite claims to the contrary.
- Limits on behavioral health office visits do tremendous harm. Behavioral health patients do not overuse office visits! And limits create emergency situations, particularly during end of year holidays, that glut emergency departments and do tremendous harm to patients
- Still no collocation and integration of behavioral and physical health
- The best and brightest become psychiatrists who seldom counsel. They dispense medications and “monitor.” All at over inflated costs.
- Tremendous shortage of professional counselors and burn out of those who are in the field today, because at today’s reimbursement levels, they can’t pay their own bills
- Insurers paying physicians for telemedicine patient consults (“visits”) at 50% of a regular office visit. Consequences?
- Physicians resisting telemedicine visits which are clearly needed, particularly for the elderly and chronically ill for whom travel is a hardship
- Missed visits and consults that should be occurring
- Exacerbated inconvenience for patients
- Lack of recognition of the added cost and hassle factor of technology and other expenses and work flow changes needed for telemedicine and potential additional malpractice exposure
- Fewer “maintenance” and counseling sessions which are badly needed for the chronically ill
- Greater emergency room and inpatient use overall
Permit me to share a truth with you. OFFICE VISITS NEVER BREAK THE BANK! Never. It’s the lack of office visits which exacerbate already existing chronic situations that result in in patient hospitalizations and specialist involvement over extended periods that break the bank. The other item that breaks the bank is the leveraged whammy of untreated combined psychological and physical health maladies which are the single biggest driver of fee for service Medicaid expenditures today. Again, office visits never break the bank.
Many insurers are not using reimbursement as the strategic tool that it is to better the system and reduce overall costs of its own insured population. Just the opposite. The folks in the “Provider Reimbursement Department” who have done trench warfare with physicians for decades are saddled with a Cold War mentality in which they push for the lowest reimbursement possible regardless of whether it makes sense. Almost a Pavlovian response. They never saw a negotiation that shouldn’t be “won” by lowering fees.
In some situations, that makes sense. But not in all situations. Theirs is a tough, tough job. But even if they are hammers, not everything is a nail. Money can be like lubricant or a growth tool, when spent properly. What types of services do you want to incent and grow? Presumably, those that might reduce the overall use of services in America and improve patient quality of life. But many insurers, for negotiation purposes, continue in an undifferentiated pattern to treat office visits exactly the same as knee replacements and open heart surgery.
This is exacerbated by the fact that typically, primary care, behavioral health, and hospice providers do not practice in large groups with negotiating leverage. So, many insurer negotiators drive reimbursement down simply because they can. Penny-wise, etc.
What if insurers doubled the per diem reimbursement of hospice inpatient acute care? It would then perhaps be 20% of hospital-based ICU care. And the additional dollars would help hospice organizations build more facilities and capabilities to start moving more terminally ill out of hospital based ICUs to much kinder and gentler settings at a fifth of the cost. In fact, it might be good strategy to look at the panoply of hospice care such as home-based palliative care, and incent its growth as well for all the obvious reasons.
What if insurers dramatically increased the compensation of primary care physicians, helped with their technology needs, and had, say, a med school loan forgiveness program? Some insurers are doing just that, including my Rhode Island Blue Plan. What might be the results? More primary care doing more of the needed things to keep us out of hospitals.
It is not always about driving the lowest reimbursement possible. Healthcare costs are not just fees. They also are driven by use and the relative expensiveness of the services. These last two are today’s biggest contributors to our out of control costs of healthcare and its financing.
I know for a fact that there are many in insurer senior management who, in quieter moments, would totally agree with this. But whether they drive that message down into their organizations is another thing. Cold War warriors do not change easily.
Jim Purcell was the CEO of BCBSRI. Prior to that, he was a trial lawyer in healthcare, and today he mediates and arbitrates complex business disputes and is focused on workplace wellbeing. jamesepurcell.com (healthcare) and jimpurcelladr.com(mediation/arbitration).