Health care reform analysis from a former insurance and hospital executive

by Marie Cooper

I have been in senior executive management in both managed care and a major hospital system. I find the hysteria over “reform” bitterly amusing because it is so misdirected.

The real problem with health care in America? Greed, indifference and incompetence, pure and simple. But not in the places everyone is pointing.

Insurer side

Insurance companies have to maximize their revenue because they answer to their boards. They are in no rush to fix claims systems that make copious errors and delay payments to providers. There are hundreds of claims processing software programs out there. Some are acceptable, some are useless. None are really good or efficient. And there is the human error factor. A careless mistake by an apathetic claims processor can create payment problems that could literally last for years.

These generate hundreds of provider appeals, totally clog the appeals and grievances systems and breed enduring ill will on the part of providers who are trying to make a living. There are just too many potential variables in every claim. The person who can develop a foolproof universal claims processing system, that is the person who will be America’s health care unsung hero. It hasn’t happened yet.

Managed care companies control costs primarily by paying for care obtained with a contracted provider. This makes sense and it is not bad business. But for the people who pay extra to have out of network coverage, their providers get short changed by a bizarre and secretive system based on usual and customary payments for the same service in different geographic area.

I defy a mere mortal to find out how those figures are determined. I couldn’t even get a straight answer when I worked in managed care. Using an obscure and dubious collection of data, figures are produced, are further subdivided into percentiles and then grouped according to something called a relative value system.

Bottom line? The payment for out of network services is a total crap shoot. You might get a little. You might get a little more than a little. You will never get a lot.

Provider side

Then we have the provider side. Where you have doctors admitting elderly patients because “the family needs a break.” Compassionate, but a big fat goose egg for the hospital. Medicare does not pay for patients who are not sick.

You have registration staff that, despite training, retraining, constant reminders and disciplinary action, does not verify a procedure has received pre-certification when they register an insured patient. Say it was just three MRIs a week – a conservative estimate. At an average of $2,000 each, you are looking at a deficit of over a quarter of a million dollars in a year.

Or they will register a patient under the wrong name. Or with the wrong insurance. Registration is the front line in getting paid. But the errors are rife, partly because of indifference. But also because there are simply too many plans and rules for one individual to keep track of. Especially when they are not particularly engaged in the first place.

There are doctors doing cardiac catheterizations on patients who blatantly do not meet Medicare criteria for payment. The Medicare criteria are there for a good reason. Anyone who doesn’t meet them should not have a catheter snaked into their heart. There are other, safer interventions to try first. If the patient didn’t meet the criteria, the procedure wasn’t paid for. More millions in lost revenue.

Then there is charity care. The standards are relatively straightforward for the patient. For patients who are seriously ill and truly in dire financial straits, this is a good thing. Oh, and I guess the ones scamming the system think it is a good thing too, because it is almost impossible to prove if they are lying and facilities do not have the resources to investigate. But charity care is never positive fiscally for most hospitals, which are reimbursed a pittance of what they actually put out.

ERs are bleeding money due to patients who come in, are treated and leave before they are even registered completely. That is a total loss for the facility. So is the person who gives false information. The foreign visitor who will never be back. The family of five who come in together for five different things: a cough, a rash, a sore finger, a stomachache and a headache. All things that are better treated in physician’s office.

But these people don’t have insurance, so no doctor will see them. They will never pay the hospital bill, which will average $500 a piece. And EMTALA laws demand that they be seen and treated.

Until insurers and providers start working together instead of as adversaries, there will be no solution to any these issues – the real but invisible problems that are driving health care costs.

Marie Cooper is a freelance writer and management consultant at Achievement Strategies.

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