FEATURE ARTICLE

What’s Really Killing Medicine

By Brien Seeley, MD

Wanna fix health care in the United States? Then fix the ridiculous way the system pays physicians and other providers. Having recently been forced to learn medical billing, I can attest that the current system:

• pays with excessive delay
  
• uses unfair, irrational and inconvenient rules
  
• offers a bewildering array of different benefits packages from different insurers
  
• uses too many payment sources (copays, deductibles, primary coverage, secondary coverage, etc.)
  
• distracts scarce physician attention from care delivery
  
• is fundamentally nonproductive (delivers no health care)
  
• disrespects physicians
  
• entails huge, unnecessary costs
  

The system continues to drive many of Sonoma County’s private practitioners to outright quit or seek refuge in salaried positions with large foundations or HMOs. Meanwhile, physicians still in private practice are struggling just to manage the accounts-receivable quagmire.

In 2003, a New England Journal of Medicine article estimated that administration accounted for about 31% of all health care costs in the United States.[1] I would wager that figure substantially underestimates the true waste. Nonproductive administrative costs are soaring because insurers are allowed to systematically delay, deny, obfuscate and diminish payment for services performed. Their powerful lobby and the politicians who feed from it perpetuate this absurd system by claiming that reform would destroy private practice and bring on socialized medicine, with its long waits for services, lack of choice of physician, poorly trained providers, and other nightmares. Guess what? Those scares are already here because of the payment system we have now.

In the current system, after a patient visits a private-practice physician, insurers usually send the patient an Explanation of Benefits (EOB) showing a sizable-looking bill for the physician’s services. Truth be known, the bill often gets so whittled down that the physician ultimately takes home a small fraction of the amount shown.

After the EOB is issued (typically 18 days or more), the physician can seek payment for the remainder of the fees denied by the EOB. While MediCare electronically forwards a claim on behalf of the physician for the remaining amount due to the appropriate secondary insurance company (e.g. Blue Cross), there is no guarantee that such will be paid. Nor is it likely to be paid before a legally sanctioned 45-day delay. What’s more, some secondary insurers make it their business to hide from MediCare’s electronic bill forwarding.

Only if the physician’s biller assiduously follows up each EOB with another time-consuming cycle of billing, stamping, mailing and then waiting 45 days will secondary insurers be confronted with the obligation to pay their share. After 45 days or more, when the secondary insurer has presumably paid, the physician is finally allowed to bill the patient for the patient’s responsibility.

Some patients pay their bill within two weeks, but many have to be contacted repeatedly by the physician’s biller, with lengthy phone time explaining the tortuous billing process to convince elderly, deaf or confused patients that they do indeed owe the physician the remaining charges. That same biller must also navigate the onerous voice-mail trees of dozens of different insurers as a large part of each day’s work, all while getting paid $20 to $30 an hour by the physician.

This wicked diffusion of responsibility by payors divides the proper amount due to the physician into essentially the low-hanging and the hard-to-reach fruit. Many offices, realizing that each mailed billing statement effectively costs them $10, simply choose not to play “fetch” and therefore do not attempt to collect the “dregs” of $15 or less. Those dregs then become a huge unaccounted shortfall for physicians—a hidden subsidy that is conveniently not talked about by insurers and to which patients are oblivious.

Insurers and politicians have long perpetuated the idea that patients should not have to pay at the time of their visit. Thus the familiar “When you’re sick, the last thing you want is to worry about paying right then,” or “Don’t worry, the physician’s office can easily wait to receive payment.”

Patients are conditioned to expect a brisk exit from the physician’s office without having to pay, and many insist on being billed for their copayment. Such conditioning has led my front-desk staff to have actual nightmares worrying about the contentiousness of asking sick, elderly patients to pay their copays and deductibles at the time of service. Resentment abounds. Many patients conveniently forget their checkbook or insist incorrectly that their insurance will cover “all that.” Such attitudes would never be tolerated at the grocery store, hair salon or tire shop.

An ideal payment system would pay physicians in full at the time of service by having patients slide a health credit card through a scanner, just like at Sears or Macy’s. The full amount due would be electronically deposited that same day into the physician’s account from a centralized “single payer” agency, that would then collect from the various responsible parties as needed. This single payer would strictly NOT be an insurance company, HMO, policy maker or risk manager, but merely a national centralized billing agency/bank.

The card scanner would automatically and instantly append all the necessary information about the office visit, the amount charged, the authentication, the billing codes, the deductibles, copays and the division of what was owed among the responsible parties into a HIPAA-compliant, secure data system accessible to all legitimate parties. The billing for that medical care would be complete, traceable, searchable, prompt and enormously cheaper than what we have now. Monitoring for fraud, abuse and errors would be simpler and centralized. Tracking of claims experience, global costs and health care system trends would likewise be greatly enhanced. Private insurers, government and HMOs alike could use the system. Patients would retain choice of physician and insurer. With modern computer technology, there is simply no excuse for the delays, waste, duplication and fragmentation of the current system.

Physicians, perhaps the most educated of professions, are being grossly devalued by the present system. Today, many full-time private-practice physicians earn less than RNs, and some earn less than rookie police officers. If we fixed our ridiculous payment system, patients would have more options, health care would cost less and physicians would be better paid. Such a fix could stem the collapse of private practice and its valuable legacy of personalized care.

References

1. Woolhandler S, et al, “Costs of health care administration in the United States and Canada,” NEJM, 349:768-775 (2003).