No one likes getting bills. But there is something that stinks particularly spectacularly about bills for healthcare that arrive despite carrying health insurance. Patients pay frequently expensive monthly premiums with the expectation that their insurance company will be there for them when illness befalls them.
But the problem being experienced by an
increasing number of patients is going to a covered (in-network) facility for
medical care, and being seen by an out-of-network physician. This happens because
not all physicians working in hospitals serve the same master, and thus may not
all have agreed to the in-network rate offered by an insurance company.
This is a common occurrence in medicine. At any given time, your local tax-exempt non-profit hospital is out of network of some low paying Medicaid plan or the other.
In this complex dance involving patients, insurers and doctors, Patients want their medical bills paid through premiums that they hope to be as low as possible, Insurers seek to pay out as little of the premium dollars collected as possible, and Doctors want to be paid a wage they feel is commensurate to their training and accumulated debt.
Insurers act as proxies for patients when
negotiating with the people that actually deliver healthcare – doctors.
Largely, the system works to funnel patients to ‘covered’ doctors and
hospitals. Patients that walk into an uncovered facility are quickly
redirected. But breakdowns happen during emergencies.
There are no choices to make for patients arriving unconscious or in distress to an emergency room. It suddenly becomes very possible to be seen by an out of network physician, and depending on the fine print of the insurance plans selected, some or none of these charges may be covered.
I recently saw a patient who received a bill for an outpatient procedure for $333. The Medicare allowable reimbursement for the procedure was $180. I have seen other medical bills where the healthcare provider was charging patients more than 10 times the amount they expected to receive from Medicare or any insurance company.
one of my patients had an unexpected medical complication which necessitated a
visit to an emergency room. He received a huge bill for the services provided.
When I subsequently saw him in my office (for poorly controlled diabetes) he
told me he could not attend future office visits because he had so many
outstanding medical bills and he could not risk incurring any additional
medical expenses. While I offered to see him at no cost, he declined, stating
the financial risk was too high.
patient is required to pay the entire medical bill if they
poor quality insurance
a bureaucratic “referral problem”
an out-of-network provider, which means they have no contractural relationship with the healthcare provider/institution, as might result from an emergency room visit or an unexpected hospitalization.
physicians and other healthcare providers usually do not know what they are
going to get paid for any given service as they contract with many insurance
companies, each of which has a different contracted payment rate. Healthcare
providers and institutions typically set their fee schedule at a multiple of
what they expect to get paid from the most lucrative payer so as to ensure they
capture all the potential revenue. In the process, they create an economically
irrational fee schedule which is neither reflective of a competitive
marketplace nor reflective of the actual cost of the services provided.
The system is unstable. We are already seeing the precursor waves of massive and multiple disturbances to come. Disruption at key leverage points, new entrants, shifting public awareness and serious political competition cast omens and signs of a highly changed future.
So what’s the frequency? What are the smart bets for a strategic chief financial officer at a payer or provider facing such a bumpy ride? They are radically different from today’s dominant consensus strategies. In this five-part series, Joe Flower lays out the argument, the nature of the instability, and the best-bet strategies.
There are five ways that both healthcare providers and payers can cooperate while they compete to bring the highest value forward to the customer.
Align incentives in the contracts: Healthcare providers must be able to provide performance guarantees that give at least some of the bottom-line risk to them. Work with third-party companies that can actually audit organizations’ abilities to give performance guarantees consistently over time.
Eschew embiggening: Size per se is not a safe harbor from risk. There are few economies of scale in healthcare. Concentration within a given market can be essential to success in offering a true range of services, well supported, at a lower price, customized to the regional population, the provider mix, the state laws, and the local economy. But local concentration is not the same thing as size per se.
And size does not help the customer. There just are no examples in the history of healthcare in which size alone has returned greater value to the patient, the consumer, or the buyer, whether lower cost, greater reliability, or higher quality.
Expand the definition: Widen the “medical services” that you fund and offer to include services such as functional medicine, chiropractic, acupuncture, and various other modalities that have been shown to be highly effective at far lower cost. There absolutely are ways to do this within licensing requirements.
Integrate behavioral health: Find ways to fund behavioral health and addiction treatment. Integrate behavioral health directly into the patient experience, triaging at the door to the Emergency Department and in every primary encounter. Find local innovators that can help pre-empt costly crises. Partner with community health, housing, and nutrition advocates. Helping people change their habits, manage their lives, and get beyond their addictions is far less expensive than fixing them over and over.
Retrain clinicians: Physicians and other clinicians are heavily trained to create and document reimbursable events. If you change the economics so that the system finds ROI in promoting health, preventing disease, managing population health, producing cures and reducing suffering as efficiently as possible, those very same clinicians will need to be retrained. Most of them will be deeply grateful, because they, like you, genuinely want to bring real value to the customer. In fact, if you do this you could end the physician shortage and the nurse shortage. People will flock back to do what they became a doctor or a nurse to do: Help people.
An official of a health system in North Carolina sent an email to
the entire board of the North Carolina State Health Plan calling them a bunch
of “sorry SOBs” who would “burn in hell” after they
“bankrupt every hospital in the state.”
Wow. He sounds rather upset. He sounds angry and afraid. He
sounds surprised, gobsmacked, face-palming.
Bless his heart. I get it, I really do. Well, I get the fear and
pain. Here’s what I don’t get: the surprise, the tone of, “This came out
of nowhere! Why didn’t anyone tell us this was coming?”
Brother, we did. We have been. As loudly as we can. For years.
Two things to notice here:
What is he so upset about? Under State Treasurer
Dale Folwell’s leadership, the State Health Plan has pegged its payments to
hospitals and other medical providers in the state to a range of roughly 200%
of Medicare payments (with special help for rural hospitals and other
exceptions). In an industry that routinely says that Medicare covers 90% of
their costs, this actually sounds rather generous.
What is the State Health Plan? It’s not a payer,
that is, an insurer. It’s a buyer. Buyers play under a different set of rules
and incentives than an insurer.
We Need Legal Assaults On The Greediest Providers!
When a patient is hospitalized, or diagnosed with a deadly disease, they often have no choice about the cost of their treatment.
They are legally helpless, and vulnerable to price gouging.
Medicare offers decent protection — i.e. limits on balance billing, and no patient liability if a claim is denied.
But under age 65, it is a Wild West — especially for emergency care, and drugs and devices. The more they charge, the more they make. Even good health insurance does not offer complete financial insulation.
We need more legal protection of patients. In some cases we need price controls.
‘Charging what the market will bear’ is inadequate, even childish, when ‘the market’ consists of desperate patients. Where contracts are impossible and there is no chance for informed financial consent, government can and should step in.
This series describes the new laws that we need. Very little is required in tax dollars….but we do require a strong will to protect.
Introduction Every day and in every corner of the country, innovative health care leaders are conceiving of strategies and programs to manage their patients’ health, as an alternative to treating their sickness (see Figure 1).
The value-based contracts that have proliferated in this
country over the past decade and which now account for about half of the money
spent on healthcare allow these wellness investments to make good financial
sense in addition to benefiting patient health.
However, a phenomenon in health coverage in the US is
increasing costs, destabilizing care continuity and holding back the potential
of value-based care. It prevents us from making the long-term investments we
Churn refers to gaining, losing, or moving between sources of coverage. Every year, approximately a quarter of the US population switches out of their health plan. Reasons can be voluntary or involuntary from the perspective of the beneficiary (see Table 1) and vary from changes in job status, eligibility, insurance offerings, and preference, to non-payment of premiums, to unawareness of pending coverage termination.
The 2016 21st Century CURES Act is the law. It is built around two phrases: “information blocking” and “without special effort” that give the administration tremendous power to regulate anti-competitive behavior in the health information sector. The resulting draft regulation, February’s Notice of Proposed Rulemaking (NPRM) is a breakthrough attempt to bend the healthcare cost curve through patient empowerment and competition. It could be the last best chance to avoid a $6 Trillion, 20% of GDP future without introducing strict price controls.
This post highlights patient-directed access as the essential pro-competition aspect of the NPRM which allows the patient’s data to follow the patient to any service, any physician, any caregiver, anywhere in the country or in the world.
According the 2019 Bloomberg Healthiest Country Index, the U.S. ranks 35th out of 169 countries. Even though we are the 11th wealthiest country in the world, we are behind pretty much all developed economies in terms of health. In the Americas, not just Canada (16th) but also Cuba (30th), Chile and Costa Rica (tied for 33rd) rank ahead of us in this Bloomberg study.
To answer this layered question, we need to look at the top ranked countries in the Bloomberg Index: From first to 12th, they are Spain; Italy; Iceland; Japan; Switzerland; Sweden; Australia; Singapore; Norway; Israel; Luxembourg; and France. What are they doing right that the U.S. isn’t? In a nutshell, they embrace half a dozen critical economic and societal traits that are absent in the U.S.:
· Universal health care
· Better diet: fresh ingredients and less packaged and processed food
When it comes to access to health care, the 34 countries that are ahead of the U.S. in the Bloomberg health rankings all offer universal health care to their people. This means that preventive, primary and acute care is available to 100% of the population. In contrast, 25 – 30 million Americans do not have health care insurance, and an equal number are under insured. For 15 – 18% of our population, financial concerns about how to pay for a visit to the doctor, how to meet high insurance deductibles, or cash payments after insurance take precedence over taking care of their health. Lack of preventive care leads to visits to the emergency rooms for ailments that could have been prevented through regular primary care follow-up, at a very high cost to our health system. Note: We spent $10,700 per capita in health care in 2017, more than three as much as Spain ($3,200) and Italy ($3,400). Many Americans postpone important medical operations for years, until they reach 65 years of age, when they finally qualify for universal health care or Medicare. Lack of prevention and primary care, health interventions postponed, and the constant worry that medical costs might bankrupt one’s family: none of this is conducive to healthy lives.
As news of Tom Brokaw’s cancer diagnosis spreads, so does his revelation that his cancer treatments cost nearly $10,000 per day. In spite of this devastating diagnosis, Mr. Brokaw is not taking his financial privilege for granted. He is using his voice to bring attention to the millions of Americans who are unable to afford their cancer treatments.
My patient Phil is among them. At a recent appointment, Phil
mentioned that his wife has asked for divorce. When I inquired, he revealed a
situation so common in oncology, we have a name for it: Financial
Toxicity. This occurs when the burden of medical costs becomes so high,
it worsens health and increases distress.
Phil, at the age of 53, suffers with the same type of bone
cancer as Mr. Brokaw. Phil had to stop working because of treatments and
increasing pain. His wife’s full time job was barely enough to support
them. Even with health insurance, the medical bills were mounting. Many
plans require co-pays of 20 percent or more of total costs, leading to insurmountable
patient debt. Phil’s wife began to panic about their future and her debt
inheritance. In spite of loving her husband, divorce has felt like the only
solution to avoiding financial devastation.
Health systems and employers are bypassing insurers to deliver higher-quality, more affordable care
By MICHAEL J. ALKIRE
Employee health plan premiums are rising along with the total healthcare spending tab, spurring employers to rethink their benefits design strategy. Footing the tab, employers are becoming a more active and forceful driver in managing wellness, seeking healthcare partners that can keep their workforce healthy through affordable, convenient care.
health systems assume accountability for the health of their communities, a
market has been born that is ripe for new partnerships between local health
systems and national employers in their community to resourcefully and
effectively manage wellness and overall healthcare costs. Together, they are bypassing traditional
third-party payers to pursue a new type of healthcare financing and delivery
While just 3 percent of self-insured employers are contracting directly with health systems today, dodging third parties to redesign employee benefit and care plans is becoming increasingly popular. AdventHealth in Florida announced a partnership with Disney in 2018 to provide health benefits to Disney employees at a lower cost in exchange for taking on some risk, and Henry Ford Health System has a multi-year, risk-based contract with General Motors.
The notion of bypassing payers is attractive for employers, especially on the back of consecutive cost increases they and their employees have swallowed over the last several years. Payers have traditionally offered employers rigid, fee-for-service plans that not only provide little room for customization, but often exacerbate issues with care coordination and lead to suboptimal health outcomes for both employees and their families. Adding to this frustration for employers is the need to manage complex benefits packages and their corresponding administrative burdens.