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, Consumer-Driven Health Care, CPT billing, Defined Contribution Benefit Plans, Direct-Pay Medicine, Direct-Pay Practice Models, Economic Issues, Government Regulations, Health Insurance, Healthcare financing, Patient Choice, Policy Issues, Uncategorized

Why Value-based Payment Methods Won’t Fix Healthcare

I’ve read several posts today on so called “Value-based payment” strategies and I couldn’t resist adding my 2-cents.

VBP can’t fix these fundamental problems because it is still based on a price-opaque shell game I like to call Fee-for-Coding, which results in:

1) Price insensitivity on the utilizer’s part.

2) Misaligned incentives on the provider’s part.

3) Lack of important price signals between buyers and sellers due to lack of advance pricing capabilities.

VBP utilizes the same fundamentally flawed economic system as our current billing model.

Moving to value-based care will require…

1) A system where prices are known in advance of care (not trauma or emergency care where extent of injuries or illness are unknown at onset – but even still a lot of those can be estimated ahead of time based on scenarios).

2) …that physicians be paid to be available to solve our problems, where payment is not tied to documenting work in a chart.

3) …that we move to a system that is based on defined contributions as opposed to defined benefits. As John C. Goodman is fond of saying, “money should follow people”, not programs and insurance policies.

Value will be elusive until we let the discipline of the market work in healthcare.

https://www.linkedin.com/pulse/why-value-based-payment-methods-wont-fix-healthcare-robert-nelson-md/

Posted in Affordable Care Act (ObamaCare), CPT billing, Crony Capitalism, Economic Issues, Free-Market, Government Regulations, Health Insurance, Insurance subsidies, Medical Costs, Medicare, Policy Issues, Reforming Medicare, Tax Policy, Uncategorized

Watch “Milton Friedman – Monopoly” on YouTube

The Healthcare industry, or medical-industrial complex, wears the armor of Government-sponsored protectionism; chinked together by pieces of the tax code, The McCarren-Ferguson Act, Certificate of Need laws, Medicare billing regulations, HIPAA, HITECH, and the ACA.

You would be hard pressed to find a more entrenched, impenetrable cartel.

Posted in Access to healthcare, advance-pricing, CPT billing, Economic Issues, Employer-Sponsored Health Plans, Government Regulations, Health Insurance, Healthcare financing, Medical Costs, medical inflation, out-of-pocket costs, Policy Issues, Price Tansparency, third-party payments, Uncategorized

The Triumvirate of Healthcare Spending

by Robert Nelson, MD

 

1. Price distortion
2. Price Insulation
3. Price Confusion

Shared via PowerPoint on Android.

Posted in Access to healthcare, advance-pricing, Affordable Care Act (ObamaCare), CPT billing, Economic Issues, Health Insurance, Healthcare financing, medical inflation, Medical Practice Models, out-of-pocket costs, Policy Issues, primary care, Uncategorized

Bastiat Society | Nashville

“Healthcare Economics 101: The Bubble is the Trouble” with Dr. Bob Nelson

ADS Security Nashville3001 Armory Dr #100, Nashville, TN 37204, USA map 

Join the Nashville chapter on November 30th at 6:00 pm for their last event of 2017.

Dr. Bob Nelson will give a talk on healthcare. The event is free and open to the public, but you are encouraged to register so that there will be enough refreshments.

About the speaker:

Dr. Robert (Bob) Nelson is the Publisher and editor of The Sovereign Patient, a blog and information resource tool dedicated to Promoting Freedom in Healthcare Using the Power of Free-minds and Free-markets.

Dr. Nelson is a founding member and spokesperson for the Georgia Chapter of the Free Market Medical Association. The FMMA is a non-partisan association that provides resources, support and education to members and to the public about the free market movement and why it is important.

He has authored of over 50 articles and essays focusing on the consequences of unwise tax laws, public policy and pricing failure which have contributed to our healthcare debacle, while proposing free-market solutions to bring down costs and improve access to care.

Dr. Nelson has spoken about healthcare economics and free-market healthcare principles to the Bastiat Society of Charleston, SC. He had the privilege of addressing the 3rd Annual Palmetto Panel at Clemson University about the importance of healthcare economic freedom within our Republic. Dr. Nelson also had the pleasure of speaking to medical students at the Philadelphia College of Medicine campus in Suwanee, Georgia about the role of Direct Primary Care.

He has been a guest on radio shows such as “Your Health Matters” 89.7 WGLS-FM, Doc Talk on WGST 640 in Atlanta and The Vince Coakley show on 103.6 FM in Greenville, SC.

Dr. Nelson received his M.D. degree at the Ohio State University College of Medicine in 1985. He is the Founder and Owner of Encompass Health Direct, in Cumming, GA; providing low-cost primary care for a flat monthly fee.

Bob lives with his wife, Tammy, in Cumming, GA.

Register Now!

Schedule:

6:00 pm Happy Hour
6:30 pm Speaker
7:00 pm Q&A

Continue reading “Bastiat Society | Nashville”

Posted in Access to healthcare, Affordable Care Act (ObamaCare), CPT billing, Direct-Pay Medicine, Direct-Pay Practice Models, Economic Issues, Employer-Sponsored Health Plans, Essential Benefits under the ACA, Free-Market, Government Regulations, Health Insurance, Healthcare financing, Medical Costs, medical inflation, Medical Practice Models, Network Discounts, Policy Issues, Third-Party Free Practices, third-party payments, Uncategorized

Irrational Healthcare Payment System Drives Costs And Why Payers Go Along With It | Robert Nelson, MD | LinkedIn


Our third-party payer system, by the nature of how coding & billing is contractually mandated, promotes increased health spending on aggregate – and the economic design of the system includes a perverse incentive to keep the spending going. 

real-health-care-expenditures-and-third-party-largerThis occurs in large part due to price insensitivity on the consumer-patient side due to the low marginal cost of entry compared to the inflated CPT billed charges which serve as a pivot point for network discounts. i.e. ~ once a co-pay is paid, patients don’t have any incentive to know or care what is done or how much it costs. 

 

These perverse motivations are what keeps premiums going up and up… Without utilization (claims), there is no other way to grow the pie because payers are not free to make a higher profit margin beyond the mandated cap, even if they do things to lower aggregate utilization which might lower premiums for everyone.  In other words, payers are not rewarded for efficiency, they reap financial reward to the extent that utilization, thus costs, continue to rise. 

Source: Irrational Healthcare Payment System Drives Costs And Why Payers Go Along With It | Robert Nelson, MD | LinkedIn

Posted in Access to healthcare, Affordable Care Act (ObamaCare), Consumer-Driven Health Care, CPT billing, Direct-Pay Medicine, Direct-Pay Practice Models, Economic Issues, Free-Market, Health Insurance, Healthcare financing, Independent Physicians, Medical Costs, Medical Practice Models, Patient Choice, Patient-centered Care, Policy Issues, Price Tansparency, Tax Policy, Third-Party Free Practices, Uncategorized

The One Thing… | Robert Nelson, MD | LinkedIn

Curly Knew…

I contend health plan networks and the multi-industry infrastructure that supports them, are simply a cartel propped up by unwise healthcare policy. They are definitely not part of a healthy functioning free-market.

Look carefully at the characteristics of how health plan networks operate and follow the money flow from start to finish. What holds it all together?  Despite its byzantine complexity and 40+ years of being entrenched into our national psyche, there is one linchpin that holds the whole perverse system together. Any guesses? What’s “The One Thing”?

 

Source: The One Thing… | Robert Nelson, MD | LinkedIn

Posted in Consumer-Driven Health Care, CPT billing, Direct-Pay Practice Models, Medical Costs, medical inflation, third-party payments

The Trouble with the Healthcare Bubble | Robert Nelson, MD | LinkedIn

Bubble-TroubleIn this self-perpetuating cycle, all of the dollars get sent through tightly controlled and mandated billing channels making it nearly impossible to render care or receive medical care unless you subjugate yourself to the process.  All of this, of course, is being fueled by exorbitant health plans premiums.

Source: The Trouble with the Healthcare Bubble | Robert Nelson, MD | LinkedIn