The fastest spreading disease in America cannot be cured with a flu shot or prescription drug. It's far more complicated. The red tape and sticker shock associated with our ever increasing medical bills is America's real killer. In the most recent issue of Time Magazine, Steven Brill, sets forth, in riveting detail, the problems faced by patients today when it comes to paying their medical bills.
Many of us can relate to these horror stories that include overcharges, denied claims, or unnecessary charges. Whether we didn't have appropriate and adequate insurance coverage in the first place or just thought there was nothing we could do about exorbitant hospital fees, we all struggle to pay the bottom line. On top of our personal issues we fail to reconcile, insurance companies often refuse to or simply inaccurately make the proper adjustments to their reimbursement, even when they are legally contracted to do so.
Many of us can relate to these horror stories that include overcharges, denied claims, or unnecessary charges. Whether we didn't have appropriate and adequate insurance coverage in the first place or just thought there was nothing we could do about exorbitant hospital fees, we all struggle to pay the bottom line. On top of our personal issues we fail to reconcile, insurance companies often refuse to or simply inaccurately make the proper adjustments to their reimbursement, even when they are legally contracted to do so.
While the Affordable Care Act (ObamaCare) will provide access to health care for more than 30 million people without health insurance, through the health care exchanges currently being set up for 2014 implementation, it will probably not significantly lower the costs of healthcare. As Brill points out in his article, the main reason for this is that the medical marketplace does not behave in the same manner as the marketplace for all other goods and services. When I go to buy a car, I know, with some preparation in advance, what the cost of the car will be. If I don't like the offer the salesman makes, I am free to shop at another car dealer to try to get a better price. This never happens in the health care arena. Rarely do we know in advance how much it will cost, nor do we shop for a better deal. We may shop for better care...but rarely is price a factor. And the industry knows this and takes full advantage with its pricing structure. We have very little, if any, negotiating power with hospitals and other healthcare providers. Only Medicare has the power to negotiate with hospitals and other providers, while private insurance companies do not.
Forget about actual medical care. Let's just look at the paperwork in the current system. Brill points out that the Medicare program costs $3.80 to process a claim compared to $30 per claim for Aetna. With this kind of disparity it's hard to argue that further privatizing medical care makes any sense or...cents at all. The misidentified truth is, when it comes to health care, government intervention actually keeps costs down.
Forget about actual medical care. Let's just look at the paperwork in the current system. Brill points out that the Medicare program costs $3.80 to process a claim compared to $30 per claim for Aetna. With this kind of disparity it's hard to argue that further privatizing medical care makes any sense or...cents at all. The misidentified truth is, when it comes to health care, government intervention actually keeps costs down.
Mr. Brill identifies the reason hospitals, and the rest of the industry, have been able to get away with this kind of pricing to date. Hospital charges do not reflect the reality of the actual costs for services rendered. How these costs derived by the "Charge Master" is a well guarded secret to patients. While very few of us will ever pay these intentionally over inflated, unrealistic charges; they do serve as a ceiling from which hospitals may be willing to negotiate lower fees. However, the problem lies when negotiating an adjusted hospital bill for clients, we usually start at the Medicare reimbursement level and work our way up, rather than begin at the upper level of the Charge Master fees, and work down. A reduction by the hospital from the full billed charges as they appear on the Charge Master, is usually still much higher than the adjustment made by an increase in the Medicare allowable amount.
The ability to control health care costs is a function of two main variables: price and utilization. If we can impact just one of these, we will bring about change.
Unfortunately, the recent trend toward integrative delivery systems, whereby hospitals are buying up medical practices will have a significant negative impact on the cost equation and the ability to reverse the increasing medical expense trend. In the days when individual practices dominated, insurance companies would be able to exercise leverage in negotiating reimbursement. According to Southwind, a Nashville, Tenn. based consulting group, with hospitals now employing 1 in 4 physician specialists and 40% of primary care physicians, compared to 1 in 20 specialists and less than 20% of primary care physicians in 2000, hospitals are becoming the dominant player. While more and more physicians continue to trade off their independence for security, in terms of guaranteed salaries and bonuses based on productivity, hospitals increase their negotiating leverage with insurance companies because of the significant numbers of patients (insurance subscribers) represented through their physician owned practices. Insurance companies find themselves virtually defenseless in setting reimbursement, and ultimately, affecting price breaks for subscribers.
Hospitals will contend that their integrative approach to the delivery system will lower costs. But, as long as their physician owned practices are allowed to continue the "fee for service" model in terms of reimbursement, it matters little that the physicians are paid a salary. The only effective solution is to tie reimbursement to outcomes that measure quality, and not solely by the number of visits or tests performed. In addition, the trend of buying up private practices by hospitals only adds another layer of fees, often labeled as a "facility fee" that the hospital now tacks on for its "consolidation."
In its March report to Congress, Medcap, a government agency that analyzes Medicare policy, found that the cost for a basic doctor visit nearly doubled once a practice was purchased by a hospital group. The reports claims that last year, a 15-minute visit to a doctor in private practice cost $69, including the $14 patient co-pay. That same visit to a hospital-employed physician cost $124. The patient portion rose to $25. According to Medcap, at that rate, Medicare spending for doctors visits alone would increase by $2 billion a year. Analysts at Florida Blue, the state's largest provider of health insurance, found similar numbers when they looked at data from cardiologists who practiced in Orange, Osceola and Seminole counties. During the past two years, they discovered that overall costs from hospital-employed cardiologists were 20 percent higher than for cardiologists not employed by hospitals.
As long as Hospitals and Doctors are allowed to operate as a typical American business seeking dominant market share and revenue, the quality of care and the cost to receive said care will never add up to numbers that benefit the ones who need it most. Despite all the new regulations in place, if the government does not step in to further reform the way the health industry charges its subscribers, even fewer Americans will be able to afford the care they so desperately need. While the owners and operators of the health care industry manage their business like every other business in a free market system, the users of this system do not behave in the same way as other consumers in other industries. It's imperative for the politicians and all citizens to understand the difference.
Setting realistic quality and cost control standards that improve the power to negotiate fees and services is imperative, if we're ever going to stop what's killing our healthcare system. Greed and profiteering may be good for business, but it's very bad for the individual's health and personal fortune. By excluding the delivery of quality outcomes and managed price ceilings, health care costs will continue to soar. Left unchecked and unregulated, hospitals and physician groups will only continue to care about the business of growing large provider networks at the expense of quality, affordable patient care.
Stay Informed. Stay Positive. Stay Healthy.
- The Patient's Advocate
The ability to control health care costs is a function of two main variables: price and utilization. If we can impact just one of these, we will bring about change.
Unfortunately, the recent trend toward integrative delivery systems, whereby hospitals are buying up medical practices will have a significant negative impact on the cost equation and the ability to reverse the increasing medical expense trend. In the days when individual practices dominated, insurance companies would be able to exercise leverage in negotiating reimbursement. According to Southwind, a Nashville, Tenn. based consulting group, with hospitals now employing 1 in 4 physician specialists and 40% of primary care physicians, compared to 1 in 20 specialists and less than 20% of primary care physicians in 2000, hospitals are becoming the dominant player. While more and more physicians continue to trade off their independence for security, in terms of guaranteed salaries and bonuses based on productivity, hospitals increase their negotiating leverage with insurance companies because of the significant numbers of patients (insurance subscribers) represented through their physician owned practices. Insurance companies find themselves virtually defenseless in setting reimbursement, and ultimately, affecting price breaks for subscribers.
Hospitals will contend that their integrative approach to the delivery system will lower costs. But, as long as their physician owned practices are allowed to continue the "fee for service" model in terms of reimbursement, it matters little that the physicians are paid a salary. The only effective solution is to tie reimbursement to outcomes that measure quality, and not solely by the number of visits or tests performed. In addition, the trend of buying up private practices by hospitals only adds another layer of fees, often labeled as a "facility fee" that the hospital now tacks on for its "consolidation."
In its March report to Congress, Medcap, a government agency that analyzes Medicare policy, found that the cost for a basic doctor visit nearly doubled once a practice was purchased by a hospital group. The reports claims that last year, a 15-minute visit to a doctor in private practice cost $69, including the $14 patient co-pay. That same visit to a hospital-employed physician cost $124. The patient portion rose to $25. According to Medcap, at that rate, Medicare spending for doctors visits alone would increase by $2 billion a year. Analysts at Florida Blue, the state's largest provider of health insurance, found similar numbers when they looked at data from cardiologists who practiced in Orange, Osceola and Seminole counties. During the past two years, they discovered that overall costs from hospital-employed cardiologists were 20 percent higher than for cardiologists not employed by hospitals.
As long as Hospitals and Doctors are allowed to operate as a typical American business seeking dominant market share and revenue, the quality of care and the cost to receive said care will never add up to numbers that benefit the ones who need it most. Despite all the new regulations in place, if the government does not step in to further reform the way the health industry charges its subscribers, even fewer Americans will be able to afford the care they so desperately need. While the owners and operators of the health care industry manage their business like every other business in a free market system, the users of this system do not behave in the same way as other consumers in other industries. It's imperative for the politicians and all citizens to understand the difference.
Setting realistic quality and cost control standards that improve the power to negotiate fees and services is imperative, if we're ever going to stop what's killing our healthcare system. Greed and profiteering may be good for business, but it's very bad for the individual's health and personal fortune. By excluding the delivery of quality outcomes and managed price ceilings, health care costs will continue to soar. Left unchecked and unregulated, hospitals and physician groups will only continue to care about the business of growing large provider networks at the expense of quality, affordable patient care.
Stay Informed. Stay Positive. Stay Healthy.
- The Patient's Advocate
