What Patients NEED to Know about Managed Care! Part II
The next reason for increases in medical care costs is the advent of 3rd party payers, government and private insurance. This change in how health care is paid for has several ramifications affecting cost, paperwork, utilization, profit, and providers.
In the realm of paperwork, even the patient is somewhat aware of the paper dragon of health care claims. Not only does each provider of service need to provide a claim to the insurance companies but proper codes must be entered on the forms. Many companies require their own custom forms. Some procedures require predetermination, yet another form and mailing. Forms sent in are lost, returned for simple information like social security numbers, consultants are hired to review forms and send back forms for further information. Courses are given with staffs and doctors investing days at a time just to learn how to process insurance forms. This time to process, learn how to code and process, and the machinery to maintain the paperwork flow, all adds tremendous cost to health care.
The second area is utilization. When health care is mostly paid for with little if any out of pocket expense patients tend to over-utilize the services. Not only do they over-utilize but especially in the welfare, or no co-pay (no patient pay systems), they tend to not show for appointments more often. Both of these tendencies help escalate health care costs.
Yes, profit is necessary for the third party payers. Essentially, the government and private insurance are the filter health care dollars must flow through to reach the providers giving the service. They have sales staff, clerical staff, and benefits to pay. For this service they must be paid. This paperwork and management of cash flow through the system costs probably 15-20% of the health care dollar. I submit this filter method is a very inefficient way of distributing care and dollars spent on healthcare.
I guess I shouldn't leave out the effect of 3rd party payers on providers. Yes, having most of the costs paid for by someone other than the patient (at least directly) takes some of the pressure off providers deciding to raise fees. This definitely tends to lead to inflation of fees.
A simple and common example will illustrate many of these points. A patient comes into my office and has a lower molar that has broken. The tooth already had a large filling and the cracked portion of the tooth just makes the tooth too weak to restore well with a filling. It should be crowned. The patient has insurance. The insurance company requires an X-ray be taken. At this patient's checkup visit, 3 months ago, I took an X-ray and don't feel another is needed for diagnosis, but I will take one because the insurance company requires it! I also will take one because if I am ever brought into court the first question asked will be did you take another X-ray? If I say no and try and explain why I didn't, I am sure I will have to get out my checkbook and pay. So I have two reasons to take that X-ray, not based on clinical judgment but on legal and insurance requirements. In addition, I will have to fill out a form describing why a crown is needed mail it in and wait for payment. If I am lucky one submission will be enough. I will not have to send in further paperwork. Since the insurance will pay for most of the crown the patient will go ahead and have the crown done instead of asking me if I could please patch the tooth for a couple of years. I will quote a fee based on the fact that most patients have insurance and can thus afford to have crowns done when necessary.
Let's get off of the 3rd party payers and move on to the tech problem of health care costs. The tech problem is closely intertwined with the problem of the public demanding care to be at the cutting edge of ability no matter what it costs. No compromise is allowed by the patient or the legal system. No one is willing to make hard choices about the possible costs versus the reward for pursuing treatment. This issue is expensive and complex. I would need to write an entire article about this subject alone just to touch the surface of the complexities involved. Sorry to treat this important issue so lightly here! Believe me, demanding the latest and greatest tech care adds a lot to health care costs. I think it is doubtful we really want to eliminate tech escalation in our health care equation. Some common sense approaches to using the latest technology would at least help control costs.
It is much too easy for a politician to say all people should have total health care and at any cost. Yes, fee for service care has tendencies to over treat but PPO's, HMO's and socialized care greatly tend to under treat and are resistant to technological and productivity advances (the incentives are just not there) The failed European and even worse the failed Russian system are glaring examples of the backward, rationed, and non-innovative care bred by non fee for service systems. Economic decisions need to be made by someone. I believe they are overall better decisions when made by the doctor and patient not politicians and lawyers!!!
Yes, the scenario I see if all health care is to revert to managed cost is not bright. At first little if any change would be apparent. The changes that managed cost will bring are subtle and take years to manifest themselves. The most glaring falsehood about managed cost is that it will reduce health care costs significantly.
On the surface managed cost seems to reduce costs but down the road I really wonder. When both regular indemnity plans (traditional insurance), allowing fee for service and managed care plans coexist I have the feeling people who are sick and expect to need care opt (if given a choice, which many are) to take the traditional plan which allows them to choose care givers. If they feel they will remain healthy and will not require services they choose managed care to cut their out of pocket costs. This effect tends to inflate the cost of traditional fee for service-indemnity insurance plans and make managed cost plans look like cost saving panaceas. When the indemnity plans are phased out all the unhealthy people will be dumped on the managed cost plans. Let's see if the cost savings is as dramatic then.
The problem is by the time we realize that managed cost really won't be the panacea to control cost the damage will have been done to the health care system. Managed cost systems don't have the financial incentives to innovate treatment (innovations traditionally result in greater per hour rewards to the doctors that develop them in the fee for service setting). They also don't have incentives (at least the providers don't) to be productive in efficiency of care. Rewards are not based on amount of care produced but mostly based on time in office or worst yet incentives for not doing treatments, the result will be less care and little if any advances in care. Our system will be frozen in time (similar to the Russian system, British System, etc.) Because of the greater demand for services dictated by the way the plans are set up (usually little if any out of pocket expense by the patient) rationing of care will be necessary. Less of our best people will go into healthcare because the rewards versus the stress and risk will convince them to go into other fields leading to skilled manpower shortages which will contribute to mediocre care and expertise.
Well enough gloom and doom. I have confidence that the American people are aware of some of the ramifications of going this route. I promised a delineation of the difference between Dental and Medical Care and then I will make some short recommendations as to how to attack the health care crisis.
Controlling cost in dentistry is a far different problem than controlling medical cost. In dentistry costs are not catastrophic. Usually the worst scenario in dentistry is the patient loses all their teeth and can physically survive, without any teeth (by the way this survival is not my idea of a great life). We are not talking death or total disability requiring expensive care for a long period of time. Costs of insuring against loss can and have been well controlled by the simple placing of maximums on benefits on a yearly basis. An interesting note, these maximums have changed little over the last 20 years even though inflation has skyrocketed costs of everything else we purchase. Dentistry has not increased in cost disproportionately when compared with inflation rates. Our house is in order. The profession isn't broken so don't lump it in with medicine and try and fix it!
To cut costs more in dentistry eliminate the middle man insurance. If people require 3rd party payers to distribute dental care dollars, substitute direct reimbursements plans. They eliminate tons of paperwork and cost much less to administer than indemnity insurance. A employer company can implement the direct reimbursement plan in house and control its costs by having employees make co-payments and imposing yearly maximums. Care decisions will revert back to the doctor and patient deciding what is necessary. Paperwork will be all but eliminated.
A second giant step would be to have the politicians (mostly lawyers) face up to their conflict of interest and pass some meaningful tort reform. Would be suits that have no merit cost millions of dollars. If a suit results in a no merit case have the person bringing suit responsible for the costs involved. When they have a risk they will not be so quick to sue unless their case has definite merit.
Thirdly, eliminate some of the increasing regulations that cost health care providers, in fact all employers, a great deal of money with little if any benefit gained by their employees or the public.