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Rebecca S. Busch
"Reforming" Healthcare Reform
October 28, 2009
Healthcare reform will come about in some shape or
form at some point in time. After all, we have seen
major healthcare reform initiatives since 1920
including Truman’s attempt at universal healthcare
in the 1950s. Today’s healthcare reform discussions
have two major flaws:
1) The word "money” is not voiced enough, and,
2) The discussion is plagued and derailed by
misinformation.
The operative word missing from today’s healthcare
reform discussion is money. Modifying insurance and
reforming our tort system is not enough to solve
this quagmire. As with many problems, the key issue
is simply money. Who gets what? When do they get it?
What are they paying for? And who is paying? Any
useful discussion therefore must begin with an
understanding of how money moves in healthcare.
The table (side bar) illustrates the key market
participants in our healthcare system – the Primary
Healthcare Continuum (PHC). The PHC is comprised of
the patient who receives care, the provider who
delivers care, the payer (or insurer) who processes
payment for care, the plan sponsor who funds this
payment and other vendors such as durable medical
equipment suppliers and pharmaceutical
manufacturers. As illustrated, the "ethically
challenged” who create fraud, waste and abuse in the
system lurk "below the dotted line.”
This is how money moves in healthcare: a patient
goes to a hospital for an appendectomy (emergency
procedure, when the patient is suffering from acute
appendicitis). The patient receives the services and
leaves the hospital. This is when the money begins
to move:
1) The hospital sends a claim (a reimbursement
request) to the payer for the procedure.
2) The payer adjudicates the claim (determines what
to pay according to the contracts amongst and
between market participants) and sends payment to
the hospital for the procedure.
3) The payer then determines what to charge the
patient’s plan sponsor for the procedure (according
to the contracts amongst and between market
participants).
NOTE: The amount of money in transactions (2) and
(3) is not the same.
4) Market participants make payments to any vendors
(disclosed and undisclosed) involved in the
contracted services related to the procedure. For
example, a plan sponsor may pay a vendor a fee for
arranging access to the procedure.
5) Any rebate activity among market participants is
completed.
6) The patient typically pays the hospital what is
not covered by the insurer.
These six types of transactions originate from just
one episode of care and can result in more than five
of financial transactions amongst and between market
participants. A large amount of transactions creates
complexity – and a "paper jungle.” The real problem
however lies in their lack of transparency. Some
market participants in the private payer market even
call their transactions "proprietary.” For example,
in the private payer market, employers never really
know the exact dollar amount that an insurer pays to
a provider for caring for their employee. In the
public sector (e.g. Medicare and Medicaid) the
government makes information regarding these types
of transactions publicly available. It is often
unrecognized that private payers may pay a provider
less than Medicare’s reimbursement rate and then
charge back employers a rate that is significantly
higher than the Medicare rate. To understand how to
fix healthcare, financial transactions need to be
transparent. Policy makers need complete and
accurate information from each market participant.
The second flaw with today’s healthcare reform
discussion is that it is plagued and derailed by
misinformation. For example, one common
misconception is that "the public option will delay
treatment.” This is not true. Medicare patients can
walk into any emergency room and receive treatment
as quickly as an individual with or without
insurance. Delays in treatment occur when hospitals,
clinics and physicians receive a capped amount of
money per month. Under a capped reimbursement fee
structure, physicians are paid the same amount of
money per month regardless if they see 100 or 1000
patients in that month. If the public option is
structured like Medicare, where fees are paid for
each patient seen, then the economic incentive for
physicians is to see more patients – and provide
access to care quickly. However, the negative issues
will remain the same. It is very easy to "steal”
from our public programs. So the operative question
is what internal controls would be put into place to
control waste, fraud, and abuse. This is not
different than the current issues with Medicare and
Medicaid.
Another common misconception is that Tort reform
will decrease the cost of healthcare. Tort reform
might reduce the cost of healthcare – to a certain
extent. It is estimated however that less than 10%
of cases filed reach a court room. To dramatically
decrease the cost of healthcare, the methodologies
that drive insurance companies to increase rates
need to be transparent. The market needs to know
what, when, why, how and who causes insurers to
increase rates. Do rates ever increase to off set
insurers losses due to bad investments in their
portfolios?
Healthcare reform is about money. Providers are
stressed by decreasing reimbursement and employers
are struggling because of double digit increases in
healthcare costs. Should the increase in the cost of
healthcare not be shared equally among market
participants? For healthcare reform to be effective
this decade the word "money” needs to be commonplace
in the discussion and misconceptions must be
corrected. Once this occurs healthcare reform might
have a chance.
About Rebecca S. Busch
Rebecca S. Busch, RN, MBA, CCM, CFE,
CHS-III, CBM, CPC, FIALCP, FHFMA is CEO of
Medical Business Associates,
Inc., and author of "Electronic
Health Records An Audit and Internal Control Guide”
and "Healthcare
Fraud Audit & Detection Guide.” |
