Dr. Kevin Most: Healthcare
We all know that the cost of healthcare in the United States is much higher per person than all other countries in the world. We are fortunate to have world class and cutting edge medical treatment that is available often within a very short distance. We have discussed in the past the insurance confusion that we have in this country, and when we look to compare health costs around the world we note that those with socialized medicine have costs that are well below ours and actually have life expectancies that exceed the US.
Now I am not a proponent of socialized medicine as we all know it has its perceived issues. The stories of individuals in foreign countries waiting for weeks or months for medical tests that here in the US can be done within days if not hours. Many studies have shown that much of the testing we receive or demand here in the US may really not be needed and have little impact on the outcome of our care.
We know we have many ways to cut costs and consumerism may just accelerate the rate at which this occurs. Hospitals will soon be asked to more transparent on what the charges are for some tests. It seems like a simple thing to do but it is more complex. Hospitals and the federal government are discussing now how to do this. It is important as patients are now being given more responsibility for the cost of their healthcare, with high deductibles or out of pocket maximums each year. Patients want more information and are demanding it before receiving care, especially elective care
Insurance companies are also looking at unique ways to impact the cost of healthcare and many may soon impact all of us here. One thing they are doing is limiting the doctor’s ability to order some tests without one of the doctors from the insurance company reviewing the medical record first. This is call “preauthorization” In many cases the insurance company is trying to steer the care plan to a more conservative plan or to deny some tests that the insurance company doctor feels are not needed at this time. A perfect example is a MRI of your back when you have back pain. The insurance company will often want to see that conservative therapy of anti inflammatory medication, rest and physical therapy has been attempted.
Another way insurance companies are trying to limit costs are to look for low cost opportunities for tests or therapy they see as a commodity. They will attempt to steer patients to a specific lab for their blood work, often this is a national lab that the insurance company has contracted with. Unfortunately this is often at an inconvienience to the patient and the physician. With physicians now using electronic records they want the results to automatically populate into the record of the patient. Often when forced to use a national lab the results are returned to the physician and then they need to place it in the patients record. This has safety issues as the chance of transposing a value or placing it in the chart incorrectly can be a disaster.
Insurance companies are doing the same with imaging. Anthem is a large Blue Cross Insurance company that provides Blue Cross insurance in 13 states, including Wisconsin and Indiana. Anthem saw that the cost of CT scans and MRI scans were more expensive in hospitals than they were in free standing or mall based imaging centers. They are putting in to place a program for their patients that are having elective CT or MRI scans. They are not allowing patients to have these scans in the hospital. They are providing them with the lowest cost provider information to their patients. These are often free standing centers that many of you may have seen in strip malls. They also have a tool that allows them to compare the quality of the sites, including equipment, staffing and accreditation status. Anthem also assists the patient in obtaining an appointment.
They also are steering their patients away from hospital based imaging for any elective cases to save costs. Many of you may ask why is there a difference in price between the hospital and a free standing facility. One must remember that hospitals need to stay open 24/7, they also take any patient regardless of their ability to pay and must follow much stricter building and regulatory laws. These differences force hospitals to charge more in order to care for the community they serve. Out patient imaging centers often restrict which insurances they will accept, and require up-front payment from patients often.
Anthem has had this program in place for a little over a year and if successful it is expected to spread to many other insurance carriers across the country.
Another very interesting thing that is happening in health care is the concept of brown bagging and white bagging. You may be thinking of the concept of bringing your lunch to work, and that is very close to what it is. Brown bagging one’s lunch is often done to save money as lunch purchased at a restaurant is much more expensive than the lunch you can make at home and bring with you. This is the same concept but move it into a medical setting. Let’s say you have arthritis and you need to receive an infusion of a medication, often your doctor will write an order and you will present to the hospital and have the medication given to you. The IV is started, the medication is hooked up, you are monitored and when completed you go home and the insurance company is sent a bill for the site, the services and the medication. In many cases now the cost of the medication is the highest cost of that episode of care. Hospitals will mark up the medication to cover the cost of holding the medication, providing the medication to those who cannot afford the medication and to help cover the cost of staffing, clinic space etc., essentially the fixed overhead costs. This is no different from a restaurant who charges much more than the cost of the meal and staff, in the restaurant case it is making a profit for a company or owner. In the hospital case it is covering the cost of running the hospital as the vast majority of hospitals are non for profit and thus do not have shareholders or pay profits to an owner. For most hospitals the profits are rolled back into the hospital to maintain the property and continue to invest in the equipment needed to provide care to the community they serve.
Well, Insurance companies are closely looking at the cost of medications and the mark up from hospitals and doctor’s offices. What they are doing now is telling the hospital, we only want you to provide the site and services needed to give this patient the medication they need, we (the insurance company) will contact with the drug company and we will pay for and have the drug delivered to the hospital for this specific patient. This is termed “white bagging” and is becoming more popular for patients receiving medication to treat cancer or other chronic illnesses that require expensive medications. In this scenario the insurance company partners with the drug manufacturer and receives a price that is lower than a hospital can get as they often have many more patients with a specific condition in their plan than a hospital does and thus their buying power is greater and they now say, “we can buy it for less ourselves, why don’t we just provide it directly and therefore lower the cost of care to the patient?” great concept but hospital is hurt financially.
Brown bagging takes this a step further where the patient goes to the pharmacy and buys the medication and then brings it to the doctor’s office or hospital for administration. This is a bit more troublesome as the patient is responsible to maintain the medication safely. Most hospitals and clinics do not allow this as they cannot assure to the patient that the medication has been maintained in a safe environment and is thus safe to administer to the patient
Both scenarios will probably grow in number of incidents, as the cost to deliver care is under the microscope and any opportunity to lower costs will be probed.
How many of you really understand the insurance situation in this country, we will take the next couple of segments to discuss the basics of health insurance.