By J.C., on November 3rd, 2008
If you are at the age where you qualify for Medicare, then you undoubtedly understand how difficult it may be to manage your medications and prescriptions. The government’s Medicare program is a terribly complicated thing comprised of four parts – A, B, C, and D. Medicare Part A is for hospital care. Medicare Part B is for physician visits, outpatient care, and durable medical equipment. Medicare Part C, also know as Medicare Advantage, is actually a special plan that covers most medical services and prescription drugs. Medicare Part D is the part of medicare that covers drug benefits. Medicare patients can voluntarily enroll in Part D and depending on the plan administrator may need to pay a premium or a deductible. Essentially, it is the government’s insurance plan for drug benefits that is administered by various other insurance carriers.
One problem with Medicare Part D is that it is difficult for patients to organize their medications, shop for different medications, and coordinate their overall drug benefits. I happened to find a relatively new company called Destination Rx that is trying to make managing the prescription drug benefit much easier for patients. I do not have a financial interest in the company nor do I use the company. But in the spirit of investigating this topic, I thought it may be worthwhile to point out some of the newer companies out there that may be of benefit to readers. It is interesting also to see how technology can empower the patient.
This is a company that essentially allows the patient to create an account and manage their prescriptions drugs. It is a free site that provides online shopping comparison for prescription drugs. If you are not yet enrolled in Medicare Part D their site allows you to do so. If you already take medication you can find out if there are lower cost drugs such as generic brands as well as mail-order and retail pharmacy prices. They have created what they call a “Medicine Cabinet” to allow you to manage your prescriptions. You can even look up medical conditions and find out what treatments are available so you can initiate a discussion with your physician about treatments.
Although I am sure that many sites and services like this will appear, it seems to me to be a great idea. I’m not sure how much traction it has had or whether enough Medicare-age patients are savvy enough to use the internet or have the resources to access the internet for this kind of service. However, what I like about this type of service is the tremendous cost savings that it might bring Medicare recipients. If retailers and pharmacy resellers are forced to lower prices do to competition and increased efficiency in drug selection, healthcare costs can decline.
By J.C., on October 30th, 2008
Some people have suggested that one way to prevent the wasteful costs of healthcare is to have a menu of treatment options, with their costs, that is presented to the patient. For example, when you are admitted to the hospital as an inpatient, the physician typically orders tons of tests, medications, and nursing orders. Most often you will likely have an intravenous fluid running, be on a stool softener, multivitamins, pain medications, daily blood work, etc. But all of these treatments and medications have a cost.
When I was a resident we had an attending on rounds who always would ask us if we knew what the costs were of every drug or treatment that we ordered. Most of the time we did not know. We ordered what was commonly ordered. We did not typically try to find out the cheapest alternative. Occasionally we would have a patient who insisted to know the cost of every medication they were receiving and all of the cheaper alternatives. Wouldn’t it be great if we could provide a menu of treatment options and their costs to every patient and allow them to direct their care?
There have been many times in my career where I felt that was the case. However, being in the hospital and seeing a menu of medications and their costs is not like going out to dinner and choosing off of a menu. Even though we describe the patient as the “consumer,” they really are not the consumer. They are the patient. They must consent to treatment and can choose treatment options, but they cannot “direct” their own care. If they could direct their own care then doctors would not be needed. As I’ve mentioned previously doctors are licensed to practice medicine and usually are board certified in their specialty. They have been trained for at least a decade to become licensed. Thus they direct patient care. Patients can choose treatments, but doctors ultimately are responsible for what happens to the patient.
In many ways, a doctor is a parent and a patient is the teenager. The teenager is almost a fully functioning adult, able to make their own decisions, but they are not old enough to be independent from the parent. A good parent makes decisions with consultation from the teenager. And ultimately the parent is responsible if anything bad happens to the teenager. There are many adult concepts a teenager cannot understand without extensive explanation. Even after such explanation they still may not understand. Thus it is not feasible to explain the pros/cons of every treatment or medication, the potential side effects, sequelae, the recent literature on outcomes, and the whole volume of information out there on every treatment and drug. Doing so would be unacceptable, and, even if you did do this, the patient may still not understand everything.
While a menu of treatment options and their costs may sound attractive in theory, it simply is not feasible and would clearly highlight that the patient is a patient and not a consumer.
By J.C., on October 21st, 2008
The theme of my last several posts has been the profit motive inherent in the medical system. Many parties appear to be responsible for this including industry and the physician’s lobby. I submit that the most responsible party is the consumer. The consumer is the one who demands the most advanced procedure, the best medicine, and the “best” doctor. The consumer is the one who demands the best prognosis and a return to the highest function possible.
One example of this is the cyberchondriac who comes in demanding the latest medicine or implant that they have seen on television. You explain to the patient that you feel that the generic medicine is just as good and is cheaper and that you are most comfortable with prescribing it because you are familiar with its side effects. However, they have seen the commercials and they have heard of the snazzy brand name. Additionally, they do not mind paying the exorbitant price of the brand name.
It is not unusual to also have the healthy young asymptomatic patient who would like a routine work up of all of his labs. My feeling is that if you are young and have no symptoms you should have the most inexpensive tests done, if any tests at all. If they are normal then you shouldn’t have anything done for a while. These patients are the kind of patients that want to stay on top of their healthcare and come in for unnecessary tests.
Sometimes there is a patient with knee pain without a history of trauma. The patient wants an MRI when there is ample evidence that the majority of knee pain resolves within six to eight weeks of conservative therapy including icing, NSAIDS, and activity modification. The MRI costs about a thousand dollars, but the patient doesn’t care because his insurance pays for it. Thus he insists to have one and if one is ordered there is a reasonable chance that it might show an equivocal signal in the mensicus. Then an expensive Orthopedic referral is made. If the surgeon is unscrupulous or if the patient insists on having surgery, an arthroscopic procedure is done. And the chain of expensive events goes on and on in this manner, costing the health system a lot of money for an issue that probably would have resolved on its own.
The underlying theme driving the demand of healthcare by the patient is a sense of entitlement. We in the United States don’t understand that if you travel halfway across the globe there are thousands of people dying everyday of disease caused from lack of basic sanitation. But when we have an annoying pimple or wrinkle on our forehead we want to pay several hundred dollars to have it zapped. When we have pain we want and expect our healthcare system to fix us. If we are not fixed then we blame the doctor and the system.
In the end, the most expensive thing is human resources. If we as patients make people work to improve our health it is going to cost money. That cost is worth it when the situation is dire. When it isn’t, the cost is wasteful. As a patient and consumer it is important to understand this concept–making the healthcare system work for you costs everybody a lot of money and makes the system more expensive. We are all intertwined in this manner, whether we want to believe it or not.
By Anthony Luafalealo, on October 16th, 2008
Former nurse and retired attorney S.J. Robinson, author of The Price of Death, has practiced law dealing with medical malpractice and insurance companies over the last 30 years. Her book focuses on issues such as health insurance reform, oversight for prescription drug production, and the growing power of healthcare conglomerates. For more information about Robinson and The Price of Death, visit www.sjrobinson.com. (Interview conducted by R. C. Anderson and Dr. J.C.)
In a capitalist healthcare system focused on profits, what is the most effective reimbursement structure to reward providers for care while also managing costs?
We need a regulated system – a private/public partnership [that…involves payment to the government for healthcare and government-monitored, private health insurance companies administering payment to privately employed doctors and privately run hospitals]. Over the last 20 years, we have been depending on the free enterprise system to bring costs down. Over that time, healthcare costs have risen faster than the rate of inflation. That is because we don’t really have a free enterprise system. The free market is skewed by politics. The large healthcare companies have huge amounts of money to pass along to Congress via lobbyists, who influence Congress to pass laws that benefit big business healthcare.
What we are not cognizant of is the tremendous amount of profit realized by these companies, healthcare insurance, managed care, and pharmaceutical companies. These companies drive up our healthcare costs. We have the most expensive healthcare in the world, spending 17% of our GDP. France, Italy, Germany, Japan, and Taiwan spend roughly 8-9% of their GDP on healthcare, cover everyone, and have extremely happy patients.
We are told that the only alternative to the system that we have is the Canadian style system. That is a false story put out by the beneficiaries of our current system, primarily the insurance companies.
One obvious consequence of bringing down big pharma and device companies is that they will no longer spend the huge R&D on blockbuster drugs if there is no capital reward via reimbursement. Thus one clear consequence of making healthcare more affordable is a slowing of discovery and advancement. How can we incentivize advancement in medicine while controlling costs?
Big pharma spends 10-15% of its profit on research and development and 30-40% on marketing. Professor Karl Lauterbach of Germany said in a PBS interview on Frontline, titled Sick Around the World, “I don’t know of a single economist who would buy into that argument. I think this is a lobbyist argument. A market works best if there are no inefficiencies, and higher-than-necessary prices are inefficiencies. And the drug companies now spend more for marketing the drugs than for innovating the drugs. This clearly is an artifact which comes across with this system of subsidized and too-high prices.”
Do you think that class-action lawsuits by providers against insurance companies are a good solution to balance the inequity of power insurance companies wield in the current healthcare climate? Or does this merely clog the judicial system and become a distraction from what providers should be doing: helping patients?
Class actions and lawsuits in general are very wasteful of resources because the outcome is extremely uncertain and the suits are very costly in time and money. They would take time away from healthcare and possibly put health care workers in an unfavorable light vis-à-vis the public. As I said, the outcome of lawsuits is uncertain, and I think they should be used as a last resort. The better approach in this case is to influence the public and Congress for the development of a new healthcare system: a public/private partnership which eliminates the excessive profits of health insurance companies, big pharma, and managed care.
In your August newsletter, you describe the many and varied problems the U.S. has had with contaminated or improperly supervised drugs coming from China. Would it not solve a lot of the U.S.’s problems as well as poor patient outcomes if we simply stopped accepting drugs from China and instead paid a bit more for drugs that are properly supervised in countries that care to ensure it? What do you think it would take to reduce consumerism from China, especially given that drugs are not the only problems we have had, but also melanin contaminated products and lead contaminated toys?
I don’t think it likely that world trade is going to be turned back, and it may not even be a good idea. We already pay two to three times more for pharmaceuticals than other developed countries, for example Canada. We have been told that we must pay more in order to safeguard our drug supply and promote the development of new drugs.
U.S. drug companies are making record profits but still want to make more. They are having their drugs made in China to increase profits. Because we pay a premium for pharmaceuticals, I believe that we are a target for counterfeit pharmaceuticals, not more protected. Counterfeiters have no compunction about who they kill and want to make the most money. In my book, The Price of Death, I discuss the point of view of the Chinese on counterfeiting. Because this administration has actually reduced funding for the FDA despite the fact that world trade has increased, we are at great risk. At its current rate, the FDA will be able to inspect the 700 plants now open in China in the next 40-50 years. What we should do is require importers to pay a government fee to have their imports inspected. There is no reason that they should be making record profits and putting the consumer at risk as they are.
There was a problem with Baxter International heparin earlier this year, which, according to the FDA, probably came from China. The FDA says that the manufacturer used oversulfated chondroitin sulfate (OCS) instead of chondroitin sulfate (CS). The relative cost of the bogus chemical was only $9 per unit vs. $900 for the correct ingredient. There had also been a reduction in the availability of other materials to make heparin because it comes from pigs, and there was a pig epidemic in China. While it is difficult to prove, one can speculate why the plants would have substituted the new ingredient when stocks of other ingredients fell short and became more expensive. I say that it is difficult to prove partly because the Chinese government had not admitted that the OCS was the cause of the problem even though the FDA has indicated so on its website. The bogus chemical fooled the standard tests [about the protein content of the product], impeding immediate discovery of the problem.
Now Here’s Your Chance to Ask the Questions (and Win One of Three Copies of The Price of Death, Too!)
Do you have a question that we didn’t ask? Here’s your chance to pick S.J. Robinson’s brain. Submit your questions for her in the comments section, and she’ll be available for a week to answer them. Also, by submitting your question, you will be automatically entered into a drawing next week in which three winners will receive a free copy of her book. (Sorry, you must be a U.S. or Canada resident to participate in the drawing.) Please see our Book Giveaways information page for complete details and ask away!
By J.C., on October 10th, 2008
I previously posted about insurance companies and the EOB. I’ve been thinking more and more about this issue and have come to the conclusion that physicians must band together and file class action lawsuits against insurance companies in order to collect the reimbursements that they legally deserve. If you take a closer look at the dynamic between insurance companies and physicians, you will find that it is heavily skewed in favor of the insurance company.
Here is typically what happens. A patient sees a physician who has an agreement in place with an insurance company. The physician sends the bill or claim to the insurance company, and the insurance company remits payment along with an EOB. One hundred percent of the time, the insurance company does not pay the full amount of the bill. The physician typically accepts the payment and does not bother with trying to collect more. When the insurance company denies the claim, the physician may try to collect payment and resubmit the claim. But typically there is a huge loss by the physician who does not have expertise in collecting payment.
If you look closely at this you will find that essentially the insurance company short changes the doctor and does not pay the full bill. In any other consumer-vendor interaction, it would be a violation of payment contract. This would be equivalent to going out to dinner and then paying half the bill instead of the whole thing. I’ve never thought of doing that, and I doubt many readers have. In those situations, it would clearly be unacceptable. We know it, and the restaurant would know it.
What makes it any different if a doctor is not paid the amount of his bill? One could argue that doctors provide a community service, and that, if a patient is getting a free ride by the doctor, that is not such a bad thing. However, the reality is that it is the insurance company getting a free ride, not the patient.
What is going to change the system? Class action lawsuits. In my next post I will highlight some examples of how this could all work.
One could argue that taking such action would essentially bankrupt insurance companies and break the healthcare system. If I had to choose between squeezing doctors or insurance companies, you know who I would choose.
By J.C., on October 1st, 2008
I’ve posted previously on how tough insurance companies can make it for doctors to collect their payments. Those of you in the profession know what I am talking about and are probably familiar with the acronym “EOB.” The EOB is the “Explanation of Benefits” that insurance companies provide to their patients and physicians.
If you are a patient, you probably only look to the bottom line or the far right which shows how much you owe the provider that the insurance company does not cover. You probably clearly overlook the fact that the amount paid by the insurance company is much less than what is billed by the doctor. When a physician provider receives the EOB, it looks a little different from the patient’s: there is usually an explanation of why the claim was not paid fully and/or why the claim was denied.
Unfortunately, the insurance companies have expertise in being as opaque and confusing as possible – the language in these explanations involves a mixture of legalese and what many of us would call “B.S.” It is the kind of language that confuses doctors and office staff and usually is only understood by the billing specialist at the insurance company. Additionally, it is a canned response by the insurance company computer system. Essentially, their computers flag certain errors or omissions and then send the generic computer response that is meant to deter the physician from resubmission or chasing the collection.
In a weak effort to provide some evidence behind my strong opinions, I found this article dated in August 2008 from the North County Gazette in New York. This is in reference to a health insurance company being fined $600,000 for failure to provide EOBs or adequate explanation of EOB denials to patients with their coverage. Interestingly, I could not find an example of a health insurance company being fined for providing inadequate EOBs to providers.
As I mentioned previously, the problem lies in the fact that the provider is good at his profession: providing medical care. He is not trained in how to maximize medical billing and how to chase down insurance companies to make sure they pay what they owe. It is a sad state of affairs and is actually a major reason why many new providers are opting to join a large managed care organization such as Kaiser Permanente, where they do not have to worry about scheduling, billing, EOBs, and human resources.
By J.C., on September 22nd, 2008
In response to my last post regarding health insurance companies, I received a comment from a physician who noted that health insurance companies try to make it difficult for doctors to collect payments. I could not agree more. It is the classic example of a big business trying to take advantage of the little guy.
Any regulation scheme that is added to a system adds additional layers of costs. When health insurance companies demand a certain format for billing submissions, this requires the physician’s office to either outsource their billing to a third party vendor with expertise in billing, or it requires the hiring of a skilled biller in the office. Both of those options essentially add the equivalent of another person to payroll. If you think you can find an administrative assistant or a medical assistant with skill in billing, then you are wrong.
Health insurance companies are aware that they are the 800 pound gorilla and can push around the small doctors. They have several strategies to prevent physician reimbursement. One easy strategy is to simply not pay claims at all or in a timely manner. A large percentage of claims go unpaid this way because doctor’s offices simply do not have the manpower to chase down unpaid bills. Sometimes the insurance company will simply deny payment and request additional documentation. You can imagine that a typical doctor’s office doesn’t have the time and energy or the infrastructure to track down and reconcile their billing.
Perhaps the most treacherous tactic by insurance companies is to pay less than the physician requests. For example, the doctor will bill out $100, and the insurance company will pay $20. There is no recourse for the physician other than to accept the payment or just stop doing that service for his patients. When health insurance companies offer you cheap insurance quotes, don’t be naive and think that they aren’t taking advantage of the doctors.
I like to relate this whole concept as a scam in which you provide service first but do not get paid. In any other industry this would be unacceptable. Non-payers would quickly go out of business because they would get the reputation for not paying and people would cease to do business with them. Unfortunately, there is collusion in the health insurance system, and there are not that many payers. There is no competitive process as everyone is pegged to Medicare rates.
By J.C., on September 19th, 2008
I know this is going to be a controversial post, but I wanted to illustrate how silly our health insurance system has gotten.
Back in the old days, people did not have health insurance. Most hospitals were run on donations, and medical visits to the doctor were not so prohibitively expensive that you couldn’t see the doctor without insurance. But the concept of health insurance evolved to be a benefit for employees, almost like a recruiting perk. It got to the point where employees were needed so badly that it became a standard fringe benefit to get health insurance. To help justify the matter was the fact that medical costs rose so that it was almost prohibitive to see a doctor, let alone get a procedure or go to the hospital, without causing a huge financial setback.
Enter insurance companies. Insurance companies came into the picture to help contain costs. They started making sure that doctors did not order unnecessary tests. They started making sure that patients paid some copayments in order to provide a disincentive for overutilization of healthcare. Basically, they didn’t want you going to the doctor frivolously and wasting money.
In order to be financially solvent and even profitable, insurance companies started raising premiums very high. Thus, health insurance costs so much now that it is a huge percentage of payroll expenditure in the United States. Health insurance companies also started playing both sides – they charged patients more and reimbursed doctors less. Thus, as middlemen, they have found a way to save a lot of money and put it into the pockets of their MBA administrators.
But the problem with the system is that health insurance companies are so profit-driven that they actually penalize you for having pre-existing conditions, even if those conditions are pretty benign. They go through your doctor’s record, and anything that your doctor writes in it they will use against you and charge you a much higher premium.
An example of this is a friend’s son who has mild asthma and rarely uses an inhaler. When applying for insurance on his own, the insurance company wanted to raise his premium 50% higher than someone of the same age without asthma! Similarly, someone who has a resolved condition such as a psychiatric diagnosis can have a higher premium even if his or her disease is in remission.
So what happens if you are currently healthy and you do not tell your doctor that you have had these health issues before? You guessed it – you pay a lower premium.
It’s a really messed up system, kind of like not reporting your car accident to the insurer so your premiums don’t go up. But the difference is that health premiums are expensive and can easily become prohibitively expensive for the average family. I’m not suggesting that you be dishonest in any way. I am just illustrating that the system has some serious flaws that need to be corrected.
By J.C., on September 11th, 2008
I’ve mentioned several times before that doctors are not good businesspeople and that the current state of the health reimbursement system is a mess. One reason it is so messy is that it is all about business and not about care. In this country, the basic teaching of medicine is that “continuous care” is the gold standard. This essentially means that when you see one doctor they are your doctor who knows you and they are the doctor that you will continue to see (if you are happy with your care). This patient-doctor relationship is the rewarding one that allows a physician to see you grow from a child into an adult into an elder. Similarly, it allows the patient to have that one person who they can trust to govern their health. The only thing that could end such a relationship was either the patient or the doctor ending it. Most typically, it lasts until the patient either passes away or the doctor retires and sells his practice to another doctor.
Enter the enemy – the insurance company. Nowadays, that type of relationship is almost non-existent. It is the insurance company who works on the patient’s behalf to enter into the patient-doctor relationship. If your doctor does not have a contract to provide care to that insurance company’s patients, then you cannot see that doctor unless you switch insurance companies. Thus in some respects the insurance company holds the patient hostage. The insurance company owns the patient, and the doctor can only see the patient if the insurance company allows this.
Recently, a doctor in the area was ill and needed to take 2 months off of work. He wanted other doctors to cover his patients and see them while he was gone. Unfortunately, all of those patients had one type of insurance that few doctors had a contract with. Thus those patients could not be cared for.
You don’t have to be a rocket scientist to see how messed up the whole thing is. Curiously, they are still teaching “continuity of care” in medical school. Soon they will be replacing that class with Economics 101 for dummies.
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