Why we need more transparency in health insurance (Part One)
Sometime in the early to mid 1980s, I remember sitting in the lobby of my pediatrician's office, listening to my mom talk with the front desk staff about timing her payment to them and her insurance claim. I must have been due for a number of vaccines and preventive care and this visit was an expensive one. She and the office staff worked out a plan and when she sat down next to me, I asked her to explain insurance. Insurance then, was insurance against bad health years. Patients went to the doctor, paid their bills, and then submitted the receipts to the insurance company. If the patient or family had a bad year, the insurance would kick in and start paying the bills. If the patient was low on cash, they could work with the office staff to negotiate payment terms after their insurance claim payment came in. Patients paid doctors. Insurance companies paid patients back.
The 80s…
I have a confession: There is a big part of me that wants those days back. I am sick of being a patient and a provider in today's system that puts the insurance company between providers and patients.
As a patient, I have occasionally stumbled upon my medical care providers doing fantastical coding to maximize their reimbursements from insurers. I can only notice those practices when I can actually get an itemized invoice which is more of a chore than you would think. I had an urgent surgery earlier this year and I had to make special phone calls to get a fully itemized receipts from the hospital and from my doctors. I couldn't BELIEVE some of the charges on them. Yet, I couldn't prove the charges to be false so I didn't fight them. Besides, I wasn't paying the bill. WHAT!? Did I actually just say that!? Yes I did. I had no incentive to go digging into itemized invoices, disputing fishy charges, because I felt like it was my insurance company's job.
As a provider, I am so philosophically, ethically, and morally opposed to "creative coding," of my client's invoices, that I am persistently underpaid for services I provide. I do so many extra assessments, so much extra monitoring, and countless out of office interventions that I could easily be making thousands of dollars more per year but then I would be playing the game I hate. This cat-and-mouse medical coding game is played by the majority, however, so what happens in the end is that insurers have to cut reimbursement rates on the "bread and butter" codes mental health providers use (and probably other primary care providers as well), leading us to lose more and more revenue every year unless we're willing to engage in the game.
The insurers are not all to blame
In our society's good-hearted effort to ensure much of the population receives good preventive and general healthcare, we've eliminated, via legislation and regulation, more transparent ways insurance companies once used to protect themselves against too many losses. Remember when you could only have 12 mental health visits a year? I am not advocating going back to a system where mental health conditions were treated differently than other medical conditions but share that example to make the point that when we make overt restrictions illegal, covert ones often take their place.
Insurance companies are left with opaque means of restricting care. These include:
Reducing reimbursements to providers to the extent that many fall out of network, resulting in a smaller available network and few clinicians with availability to see members.
Refusing to panel qualified clinicians, claiming a "sufficient panel" even while many members struggle to find someone to see them.
Claiming that services are "not medically necessary," according to best practice standards (with pretty weak evidence bases) buried deep in clinician provider guides that are not available to the general public.
Employing overly broad utilization management (UM) standards. "Utilization management," is the practice of creating rules about what is "clinically indicated" for various conditions. For example, an increasing number of companies have claimed that 45 minutes and not one hour, is a standard psychotherapy visit which limits the types of treatments clinicians can do since many protocols take 60-90 minutes per visit to complete. The insurance company says you don't need it, even if your provider disagrees.
Enacting and enforcing rules on providers that don't have time, energy, or money to fight back against rate decreases and restrictions.Primary care providers and mental health providers are some of the lowest paid and poorest resourced (in terms of administrative staff and time) workers in healthcare. When you lower their reimbursement rates or restrict care, they have little to fight back with, unlike better resourced specialists and hospital systems.
A painful solution - Direct pay with insurance as a safety net
Do you want to know who a great investigator of confusing invoices is? A consumer who has to pay a bill that doesn't make any sense to them. Do you want to know who a great advocate for care they need is? The patient who needs the services. So despite my generally "liberal-leaning" attitudes, I've recently become all free market libertarian on insurance for everyday medical expenses. I would love to get the insurers out of the relationship between patients and doctors, let patients do some negotiating, and of course provide an appropriate safety net for people who can't afford to participate in this system.
The problem is how to manage the transition from our current third-party payer system to a future in which consumers pay providers directly and get reimbursed by insurance. The cat-and-mouse coding and billing game between providers and insurers has driven up prices to levels where the average consumer can't pay cash for an average doctors visit. How does this inflation work? Let's say that dermatologists in your area are charging $100 for shave biopsies. The insurance company looks at this and says "ok... to account for variations in pricing we'll set our allowed amount (what the insurance company will pay) to $125." Once word gets around, dermatologists raise their prices to $125 to maximize reimbursements. Then the fanciest dermatologist in town, who used to charge $125 moves their rate to $150. The insurance company surveys the market and says "Hey... it looks like dermatologists are charging more for this procedure in this city. Let's move our allowed amount to $175, especially since there aren't enough dermatologists and we want our insured patients to get in." How does the community respond? They raise their rates to $175 and the elite doctor raises theirs to $200. Repeat this cycle a few times and suddenly you're paying $500 for a procedure that used to be $100. And although prior to this price inflation, consumers could afford to pay $100 directly to their doctor and wait to be paid back by insurance once it kicked in, they can't afford $500, where prices currently are set.
I picked on dermatologists and made up fake numbers for this example so that this discussion is not construed to be a discussion of therapy prices (I prefer to not go to jail for price fixing or whatever). The fact remains that I hear my colleagues all the time saying "Make sure you set your rate just above what your highest paying insurance panel pays, to maximize your reimbursement." I get it... you gotta eat, but this is the kind of thinking that got us into this mess in the first place.
Moving from direct third party payments for everyday medical expenses will require that prices get re-adjusted to levels that are accessible to consumers and will require that providers and patients actually negotiate fees and payment terms. This is less of an issue in therapy where prices are usually based on a transparent, per-hour charge and more of an issue with hospitals and procedures. The entire system has to change to one in which consumers and health care providers can have honest, clear discussions about charges. This is where I get stuck: I don't know how to get us from here to there. But I'm pretty sure we have to get THERE or all of healthcare will become so cumbersome and so expensive, that it won't work for anyone.
As insurance becomes more expensive with out of pocket and deductible costs going higher and higher, my hope is that more clinicians will be brave and go to a direct care model, opting out of the coding and billing wars. I also hope that more companies offer their employees insurance plans that make use of high quality direct care clinicians. These plans need to come with education on how to find, negotiate with, and submit claims directly to their insurance company to protect against heavy financial losses. I'm trying to find the courage to change the model of my practice to enable this type of care and I'd love to hear from you if you're already further along on this journey.