Posted in Access to healthcare, advance-pricing, Economic Issues, Health Insurance, Healthcare financing, Medicaid, Medical Costs, medical inflation, Medical Practice Models, Medicare, out-of-pocket costs, Patient Choice, Price Tansparency, Quality, Uncategorized

G. Keith Smith, M.D. — Health “Coverage” as a Distraction


I think it is good to be alert to any discussions that are “downstream of a flawed premise.” Let me explain.

When I hear, for instance, that the “flat tax” is preferable to the current income tax, I think to myself that this is a discussion of the knife versus the axe, a conversation far downstream of one addressing government spending or the very legitimacy of denying someone their earnings. After all, victims don’t generally care what the mugger does with their money. They just resent being mugged and no discussion about whether the mugger used a knife or a gun will likely provide any solace.

Similarly, I would argue that arguing for everyone to have health “coverage” is far downstream of the more original problem: the cost of healthcare. To provide “coverage” for everyone in the current climate of gross overcharging primarily serves the interests of those who employ the “what can I get away with” method of medical pricing.

The fierce push back against true price transparency by the cronies in the medical industry makes more sense in this context, as price honesty denies them access to everyone’s blank checkbook as the health cronies are well aware.

Supporters of government-guaranteed “coverage” object with the following arguments.

First, coverage is equated with healthcare. While millions of Canadians streaming across the border to secure their health needs could be used to refute the idea that coverage is synonymous with care, this disconnect has become more apparent in this country. Each passing day reveals Medicaid and Medicare “coverage” to be a “black mark,” an actual obstacle to obtaining care, as these government programs and their associated rationing through price controls and hassles are creating the lines the central planners intended. Physicians are either dropping out of these programs altogether or they are limiting their exposure to patients with this “coverage.”

Another objection points to the relief from financial devastation that having “coverage” represents. Keep in mind that not only are well over half of the bankruptcies in this country medically related, but almost three quarters of those filing for medical bankruptcy have insurance. This points powerfully to cost as the root cause of medical economic ills.

Acknowledging this is a slippery slope for the objector, however, for no economic system better provides for resource allocation than the market and the cronies and their government pals know this as well as anyone.

The market is the only source of price deflation with simultaneous improvement in quality. This powerful competitive mechanism has brought affordability to countless products and services in all industries and has begun to bring rationality to health care pricing as more physicians and facilities honestly post their prices for all to see.

Rather than focus on “coverage,” which allows the cronies to continue their financial feeding frenzy, we should remain unalterably focused on cost. The competition unleashed will result in a medical price deflation the likes of which will cause even the most skeptical objector to re-evaluate the role of “coverage” in the provision of payment for health care.

This is no prediction. This is exactly what is happening here in Oklahoma where so many health professionals have embraced the same market discipline every other industry must endure. The reasonable prices and high quality of care, have had such a wide appeal that Oklahoma City has evolved into a medical tourist destination for many patients far from here, while simultaneously bringing savings in the millions of dollars to those who actually pay for healthcare, locally.

This is my answer to another objection from those who claim the inapplicability of market competition to health care.  Whether the focus on “coverage” is a deliberate distraction by the crony propaganda machine or a well-meaning but misguided attempt to provide better access to care, we must keep our eyes on the “price transparency ball.” The Oklahoma market is already harshly judging those attempting to avoid this gaze and I believe this trend will continue as long as we identify, challenge and reject conclusions downstream of their flawed premises.

Posted in Access to healthcare, advance-pricing, Affordable Care Act (ObamaCare), CPT billing, Deductibles, Dependency, Direct-Pay Medicine, Direct-Pay Practice Models, Economic Issues, Employee Benefits, Health Insurance, Healthcare financing, Individual Market, Medical Costs, medical inflation, Medical Practice Models, Organizational structure, outcomes measurement, Patient Choice, Policy Issues, Price Tansparency, Self-Insured Companies, Self-Insured Plans, The Triple Aim, Uncategorized

U.S. Healthcare: A Case Study of What Happens When “Insurance” Supplants Price-Transparent Markets

By Robert Nelson, MD

Our health insurance-based third-party payer protocols have pernicious and nefarious economic consequences on the cost of medical care; and in many ways has diminished access due to regulatory complexities that accompany these interventions.

The undeniable result continues to be a rampant increase in healthcare prices, which is catalyzed by the economic distortions of the 3rd party payer effect and perpetuated by the price-obscuring distortions of the CPT billing cycle.

We have taken the concept of insurance, designed to pay out rare higher-priced claims on unpredictable events, and turned it into a product whose design promotes an incentive for everyone to use it as often as possible.

Insurance is sustainable only when the financial risks of individually rare events are spread over a large population. When it also becomes a funding source for anticipated and affordable events, combined with a perverse incentive to utilize it to the margin, the result is the creation of a perpetual payout fund.

The costs of sustaining this model are never satisfied, being squeezed by patients who are chasing the benefits and providers who chase the billing codes to achieve maximal reimbursement.

As evidence for the negative consequence of misusing insurance as a pass-through system for virtually every healthcare expense (accelerated by passage of the ACA), we can examine the employer-sponsored group market premiums.

From 2007 – 2017 the average premium for family coverage increased by 55% and employee contribution rate as a share of premium cost increased by 74% over the same 10-year period; while median household income went up by only 3%.

To add financial injury to insult, the percentage of employees with an out-of-pocket maximum of greater than $3,000 doubled, going from 30% to 60% of employees.

“Eighty-one percent of covered workers have a general annual deductible for single coverage that must be met before most services are paid for by the plan. Among covered workers with a general annual deductible, the average deductible amount for single coverage is $1,505.” ~KFF.org

Between 2012 – 2017, the percentage of covered workers with a general annual deductible of $1,000 or more for single coverage has grown substantially, increasing from 34% in 2012 to 51% in 2017. Thirty-seven percent of covered workers in small firms are in a plan with a deductible of at least $2,000, compared to 15% for covered workers in large firms.

In the ACA individual market insurance exchanges, single coverage premiums (unsubsidized) increased by 62% and family coverage premiums increased by 75% just since implementation of ObamaCare!

Our third-party payer system has created a dependency paradox!

The same funding method that contributes to runaway costs also causes us to be more dependent on it for access. This guarantees that Healthcare will cost significantly more than the sum of its individual parts, and will continue to escalate faster than our ability to pay for it.

The costs associated with health plan premiums (aka insurance) have become a surrogate for health-care costs.

Now let that sink in!

In what other market does the cost of an insurance product act as substitute for the aggregate cost of the product or services that it insures?

Now apply a similar scenario to the auto insurance market. It doesn’t take much imagination to extrapolate how that would play out. But if you want some help visualizing the scenario, here’s a brief vignette. https://lnkd.in/eUGeCKv

Self-insured employer health plans are in a unique position to break out of this dependency paradox.

By contracting with a Direct Primary Care practice and re-routing subsequent encounters away from the more expensive insurance-based protocols, Self-insured employers can utilize creative plan designs to cut costs and improve employee satisfaction.

Data from the Qliance experience, and supported by other self-insured employer’s experiences, utilization of efficient primary care via the DPC model reduces unnecessary downstream care by approximately 50%, with the resultant aggregate cost savings of nearly 20%.

The caveat being, as we double the number of primary care visits combined with longer visits to adequately address problems, the need for emergent visits, ER visits and specialty intervention drop significantly.

A similar level of savings for direct-pay lab tests was noted in data published in 2014 by CMT journal comparing lab fees charged to a Direct Pay practice by the lab vs. the CPT billed charges by the lab (assuming patient had no coverage or had not met their deductible). For five common blood tests the savings was 89% by not using insurance, with lab billed charges of approximately $782 compared to a direct pay cost of $80. Plum Health, a direct primary care practice in Detroit, shows similarly impressive lab test savings of 87% on six common blood tests; $811 vs $106.

Many Self-insured companies are beginning to discover the value and savings in this approach, while breaking free of the coverage trap and the myth that health insurance equates to health care; and the realization that so-called “access” to inflated pricing and the phony discounts used to fleece the buyer is no longer a conversation they are willing to have.

Posted in Access to healthcare, advance-pricing, Affordable Care Act (ObamaCare), CPT billing, Deductibles, Economic Issues, Employer-Sponsored Health Plans, Government Regulations, Health Insurance, Healthcare financing, Medical Costs, medical inflation, out-of-pocket costs, Patient Choice, Policy Issues, Uncategorized

On the Importance of Price Transparency

Dollar-under-magnifying-glass-1024x910On the importance of transparency… may I present exhibit A: https://www.medpagetoday.com/publichealthpolicy/ethics/83459

Pay particular attention to the content of the last paragraph!!! 

“The Affordable Care Act mandates that health insurers cover all federally recommended vaccines…at no charge to patients,…

Kaiser Health News looked at what its own insurance carrier, Cigna, paid for those free flu shots. At the high end, it shelled out $85 for a flu shot given at a Sacramento, California, doctor’s office that was affiliated with Sutter Health, one of the largest hospital chains in the state. Further south, in Long Beach, Cigna paid $48 for a shot.

Prices in the Washington, D.C., area went even lower, to $40 per shot at a CVS in Rockville, Maryland, and to $32 per shot at a CVS in downtown Washington that’s less than 10 miles away from the Rockville location.

Picture1.pngOne expert told KHN that the variation has nothing to do with the cost of the drug, but stems from secret negotiations between health plans and providers. While patients are expected not to care since the shot is free to them, these costs come back to bite in the form of higher premiums — which is one of the major complaints about the ACA.”

Posted in Access to healthcare, advance-pricing, Affordable Care Act (ObamaCare), CPT billing, Direct-Pay Medicine, Direct-Pay Practice Models, Economic Issues, Free-Market, Government Regulations, Health Insurance, Healthcare financing, Independent Physicians, Medical Costs, medical inflation, out-of-pocket costs, Patient Choice, Policy Issues, Price Tansparency, Uncategorized

Surprise Medical Bills: We Know the Cure…Few Are Using it

This whole issue of “surprise bills” is a symptom of a more pernicious economic disease which has been driving prices in healthcare for decades; that being, a lack on discoverable, actionable meaningful prices for bundled medical services.

Moreover, the lack of transparent/actionable pricing in healthcare is a derivative of the manner in which we have chosen to code, bill and get paid for medical services.

And most of the legislative and regulatory fixes proposed do NOT correct the core problem.

The corollary being, there are no surprise bills when we use real honest pricing strategies!

Dr. Keith Smith and Dr. Steve Lantier

Case in point…you will never have a surprise bill from Surgery Center Of Oklahoma. They publish easily discoverable all-inclusive prices for their surgical procedures. And, they offer same price to any willing buyer, because they aren’t controlled by network contracts.

Price setting or caps is not the correct response to the problem of this form of price gouging. This knee jerk visceral reaction is shortsighted. Price setting ALWAYS distorts markets in negative ways which are not always apparent; shortages or supply chain inefficiencies/interruptions/gaps are inevitable.

It is NOT the cost of medical care & and pharma that is the problem…It is the simultaneous lack of both transparent & actionable prices, combined with using proprietary contractual formulary agreements as a substitute for honest pricing, which has brought us to this dangerous fiscal precipice. Hiding costs by shifting them or redistributing them is same economically illiterate strategy which brought us Obamacare.

We can do better.

Posted in Access to healthcare, advance-pricing, CPT billing, Direct-Pay Practice Models, Economic Issues, Health Insurance, Healthcare financing, medical inflation, out-of-pocket costs, Policy Issues, Uncategorized

The Sorry State of Healthcare Financing: “But I Didn’t Get the Memo!”

Memo.LumbergYou pull into a Gas Station and discover that there are no prices listed on the pump, just a slot to insert your auto insurance card…only to find out your State Farm policy is not part of the gas station’s network! You just want to fill up and you are willing to pay cash, so you ask the attendant how much it is per gallon.

The response: “We can’t be sure until we know what your out-of-network benefits are… so you’ll need to pay a $200 deposit until the claim cycles through. If the gasoline is less than $200 you’ll get a refund; if more, then you’ll get an additional bill.”

Or you sit down at a Restaurant, open the menu to discover there are NO prices listed…Not only that, but you have to agree to eat the food and pay whatever price your insurance company says you owe!!!

This, my friends, is the sorry state of healthcare economics and a big reason why Healthcare is so expensive…because it isn’t the cost of care that is the problem; it’s the price we are being charged for the privilege of using our insurance!!!

Posted in Access to healthcare, Accountable Care Organizations, American Presidents, big government, Doctor-Patient Relationship, Economic Issues, Electronic Health Records, Health Insurance, Medical Costs, medical inflation, Medicare, Patient Safety, Policy Issues, Uncategorized

How Medicare Ruined American Healthcare | Medpage Today

Regarding the King-Anderson bill, the forerunner of Medicare, touted by JFK which eventually was defeated in the Senate…

“Edward Annis, MD, spoke eloquently to an empty Garden and to one of the biggest TV audiences of the times.

He explained directly to viewers: “This is not health care insurance … It will put government smack into your hospitals … deciding who gets in, who gets out, what they get, and what they don’t get. … This King-Anderson Bill is a cruel hoax and a delusion. … It will stand between the patient and his doctor. And it will serve as a forerunner of a different system of medicine for all Americans.”

In the late 1990s I asked Dr. Annis what was in the King-Anderson Bill that enabled him to predict in 1962 the insolvency of Medicare and the coming government takeover of healthcare. He replied with a smile, “Cost-plus financing. It was a license to steal.”

Indeed, Medicare ushered in unbridled spending for two decades before approaching insolvency.

But, as predicted by Dr. Annis, the system became insolvent by the early nineties… Hospitals and many providers became addicted to the easy money and abused the system. Why not? Cost-plus meant guaranteed profit.

Faced with Medicare insolvency, the insurance lobby persuaded Hillary Clinton to have secret meetings, without physician input.

Though Hillarycare never became law, the effort brought a sea change. Patients could no longer choose their doctor. Insurance companies now owned the patients. Participation in HMOs rose from 10% to 50%. Your doctor could no longer refer you to the best hospital or consultants if they were “out of network.” The doctor-patient bond had been successfully severed.

Medicare does not mandate who gets into hospitals, but it forces patients to get out by paying for only a limited number of days.

For the past two decades, hospitals have aggressively been buying up medical practices. The goal is to establish accountable care organizations (ACOs). Private practitioners are being elbowed out slowly but surely. General practitioners (GPs) cannot admit a patient to the hospital without “hospitalists” taking over. Hospital surgeons cannot refer to private surgeons, etc. Even the concierge model will be wiped out.

The Medicare approach to ACOs requires three things: 1) electronic medical records, 2) a “Quality Care Protocol,” and 3) a “Protocol for the Elimination of Non-Compliant Physicians.”

This is the ideal rationing system.

The computer will eventually dictate all allowed testing and treatments according to a “quality,” or more likely “cheapest way to do it,” protocol. Providers will ration according to the computer or they will fall into the “protocol for elimination of non-compliant physicians.”

In the new system, no one has a doctor. Doctors have a shift. The doctor you see on the morning shift has absolutely no responsibility for you when his/her shift is over or on a day off. A nurse practitioner takes the patient history and physical, further fractionating care. A system like this requires that all doctors are created equal. They are not.

Politicians and bean counters have never understood healthcare delivery. It was used and abused as a political tool.

No one listened to the warning of Dr. Annis. The AMA is often demonized by historians for opposition to Medicare, but it understood healthcare delivery and the destructive nature of cost-plus financing. I blossomed in the Golden Age of Medicine and bear witness to the fall.

Source: How Medicare Ruined American Healthcare | Medpage Today

Posted in Access to healthcare, Affordable Care Act (ObamaCare), American Presidents, Defined Contribution Benefit Plans, Economic Issues, Employee Benefits, Employer-Sponsored Health Plans, Government Regulations, Health Insurance, Health Reimbursement Arrangement (HRA), Healthcare financing, Individual Market, Large group insurance market, Medical Costs, medical inflation, News From Washington, DC & Related Shenanigans, out-of-pocket costs, Policy Issues, Portable Insurance, Price Tansparency, Uncategorized

Trump could revolutionize the private health insurance market

Some believe the Individual Market is too weak to revive, given the hit it took as as result of the ACA.

I am optimistic that this ruling to utilize HRA is this manner will be a “shot in the arm” and revitalize the market again.

This article below highlights the benefits of a defined contribution approach as a means to purchase health insurance. Anything that makes us less dependent on ESI and gives more portability & options, freeing the labor market from job-lock is a good thing. – Forum for Healthcare Freedom

Avek Roy

“Last week, the White House finalized a rule that allows employers to fund health reimbursement arrangements (HRAs) that can be used by workers to buy their own coverage on the individual market. This subtle, technical tweak has the potential to revolutionize the private health insurance market…

The council found an elegant way to give employers the opportunity to voluntarily convert their health benefits from a defined benefit into a defined contribution. For example, an employer could fund an HRA for each worker and their family, which they could then use to shop for a plan that best suits their needs.”

https://www.washingtonpost.com/opinions/trump-could-revolutionize-the-private-health-insurance-market/2019/06/17/bc8ccce4-9124-11e9-aadb-74e6b2b46f6a_story.html

Posted in Access to healthcare, DC & Related Shenanigans, Economic Issues, Education, government incompetence, Government Regulations, Health Insurance, Healthcare financing, Influence peddling, Medical Costs, medical inflation, Medicare, News From Washington, Organizational structure, Policy Issues, Reforming Medicaid, Reforming Medicare, Tax Policy, Uncategorized

The History Of U.S. Health Policy Is A History Of Political Exploitation

Greg Scandlen

By Greg Scandlen

It all began with a concept known as “Roemer’s Law.” If you ask anyone who has studied health economics or health policy in the last 50 years, “What is Roemer’s Law?” each will be able to tell you in an instant: “That means a built bed is a filled bed.”

Milton Roemer, MD, was a researcher and professor, mostly at the University of California-Los Angeles, who spent a lifetime (he died in 2001) advocating for national health systems around the world. He was involved in creating the World Health Organization in 1951 and Saskatchewan’s provincial single-payer system in 1953.  His “law” was based on a single study he did in 1959 that found a correlation between the number of hospital beds per person and the rate of hospital days used per person. That’s it. That is the whole basis for “Roemer’s Law.”

“A built bed is a filled bed.” This little bumper sticker slogan has been the foundation of American health policy for 60 years. Hundreds of laws, massive programs, thousands of regulations at the federal, state, and local levels of government, all have been based on this slogan. It is the source of such concepts as “provider-induced demand,” and has resulted in centralized health planning, Certificate of Need regulations, managed care, and everything else currently on the table. Yet this “law” is both verifiably untrue and illogical.

There is a kernel of truth to it. When third-party payers pick up the tab, the usual tension between buyer and seller doesn’t exist. The buyer has no reason to resist excessive prices if someone else pays the bill.

But the believers in Roemer’s Law take that core idea to Alice-In-Wonderland proportions. They argue that, therefore, whenever a health-care provider wants to make more money, it simply has to sell more — more capacity equals more sales without end. So, the only way to reduce this endless consumption is to limit the capacity — place strict controls on the availability of services. But the notion fails for several reasons:

Source: The History Of U.S. Health Policy Is A History Of Political Exploitation