Virtually everyone understands the importance of major medical insurance as it relates to unexpected high-dollar care for severe injuries and significant medical conditions, but the value equation for health insurance is quite different when applied to coverage for primary care services.
The full potential cost for primary care services is neither expensive nor unpredictable. Routine and preventive care and the management of most acute illnesses and the majority of chronic disease processes by primary care physicians would be quite affordable for most Americans even if they had no health insurance. The involvement of health insurance in the relationship between patients and their primary care physicians introduces several major challenges and disadvantages. Here are the six primary areas of concern.
1. Non-value-added middlemen
Insurance involvement makes primary care more expensive. It is estimated that as much as 40 percent of revenue paid to primary care physicians who participate with major health insurance goes to pay for administrative overhead, claims processing, insurance company profits, and the compensation of insurance brokers. This list of middlemen who mediate the interactions and care that you receive from your doctor do not actually add value to your quality of care or patient experience. They do add significant costs for your doctor, your employer, and ultimately you. In reality, inserting these middlemen between you and your doctor makes it more challenging for doctors to do their job.
Who pays your doctor? The answer makes all the difference to your access and customer service. So who pays your doctor? Your insurance company. Realistically, your doctor doesn’t work for you. They work for your insurance company and spend a lot of time and money meeting their requirements. This insurance middleman increases your cost, kills convenience, and leads to poor health.
2. Volume-based care
When the delivery of health care services is adjudicated by insurance on a fee-for-service basis, your care is volume-based. Every service you receive, including lab work, other diagnostic tests, all treatments, examinations, discussions, and time with your doctor, only happens if these services are individually deemed covered and reimbursable by your insurance plan.
For physicians practicing under this model, they are only paid if they are able to justify each individual service they render with codes (CPT procedure codes for specific ICD-10 diagnostic codes) and documentation that are acceptable to the insurance carrier. A provider contract between your doctor and your insurance company determines the amount your doctor is paid on a fee-for-service basis.
Given the ever-increasing costs to operate a medical practice, providers can only sustain practice viability by increasing the volume of patients they see. This dynamic of volume-based care is why primary care physicians are always rushed and access to care is limited.
3. Misaligned incentives
Why do doctors do what they do? Why do they require the visits that they do? Why do they order the tests that they order? The treatments? Make the referrals they make?
Medical doctors are regularly found to be among the most trustworthy professions, but most doctors practice in an environment that incentivizes them to order more tests and treatments. Whether self-employed or working as employees of hospital systems, your doctor’s take-home pay is largely determined by what the doctor’s office bills. Just as volume-based care adds costs to the system, these misaligned incentives also add to the number of medical services that are performed.
Not only is physician compensation tied to their number of patient visits, physicians may also be reimbursed directly or indirectly based on the number of tests, treatments, and other ancillary services that they order.
Hospitals benefit greatly from the downstream medical care that is referred to their facilities by primary care physicians working directly for hospital-owned medical practices. In this insurance-based fee-for-service system, even the most altruistic physicians may be ordering office visits, tests, treatments, and referrals that are questionable or altogether unnecessary. Your doctor’s incentives are rarely ever actually in line with yours.
4. Noncovered services
There is another side to the coin. This volume-based practice model may also result in the under-delivery of important medical services. Some important diagnostic and treatment services are deemed to be noncovered in certain situations. If your insurance carrier is unwilling to reimburse your doctor for a test or treatment, the doctor will be less likely to recommend it.
If insurance is not willing to cover the procedure (or if it would be subject to a very high deductible and out-of-pocket expense to the patient), your doctor may choose not to recommend the procedure due to concern about your direct expense or fear that they may not collect payment at all. Your doctor really doesn’t work for you in these cases but is beholden to your insurance company. As you can imagine, this mindset has great potential to compromise the quality of patient care.
5. Hidden true patient costs
Health insurance is a shell game. The true costs of health care services and the mark-up at each step in the delivery system are well hidden. What does a service cost your doctor or the medical office to provide? What does it cost your employer? The insurance company? As a patient or covered member, you may never know.
Eventually, you will find out what it will cost you personally—but not until well after you have received the service. The complexity and multiple middlemen involved in health insurance pricing, repricing, and reimbursement currently make it nearly impossible for individuals to determine the real costs for medical services that they receive.
It is fairly common for out-of-pocket payments for diagnostic and treatment services that are delivered by primary care physicians and filed with health insurance to exceed the market-based cash prices that could be paid (without insurance involvement) for the same services. The fact is, most patients never know it when their health insurance is delivering a penalty rather than a financial benefit. Historically, these disparities have not been disclosed by insurers. This long-standing industry practice leaves most patients overpaying for some medical services on a regular basis.
6. Deterrents to care
Health insurance is designed to limit how often and how quickly people go to the doctor. This is particularly true with primary care.
Copayments, deductibles, and other out-of-pocket expenses built into insurance plans have proven to deter patients from seeking timely and appropriate primary care. As health insurance has become increasingly expensive, deductibles and out-of-pocket costs have increased to keep premiums from rising even higher. Patients pay first before their insurance kicks in when accessing most primary care services. They are paying directly for more routine primary care services and become increasingly likely to postpone or avoid needed care.
According to a recent survey of 1,000 Americans conducted by 20|20 Research, 64 percent of Americans say they have avoided or delayed medical care in the last year due to expected costs. These costly insurance plan design mechanisms, along with the other inefficiencies created by insurance involvement in your relationship with your doctor, deter access to medical care that is otherwise uniquely available to people across our country.
Troy A. Burns is an internal medicine physician and author of Medical Answers Now!: How Direct Primary Care Guarantees Fast Access to Your Doctor.
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