09 March 2009

Who makes the decisions?

I pointed out the lovely sound bite the other day: "Who would you rather have making decisions about your healthcare - someone who has a profit motive for denying coverage and treatment, or someone who doesn't?" This prompted the immediate rejoinder from Peter: "You want the government to dictate to physicians what they are and are not allowed to do in the treatment of their patients?" and a similar sentiment from Anonymous (that guy is everywhere): "So you'd rather have people with political motives making decisions about your health care?"

And the answer, of course, is yes.

With some explanation:
When we talk about "decisions" being made (outside of the patient-physician relationship) we are talking about decisions regarding funding, or coverage -- more specifically the decision to deny coverage for a given procedure, effectively denying it to all but the very wealthy or the very committed. In an ideal world, these decisions would not be necessary -- we would have enough funds to cover every service for every patient who wanted it and no such "decisions" would ever be made. That, of course, is pure fantasy. In an ideal world somewhat closer to the real world, the decisions would be made on a basis of efficacy and cost-efficiency, with flexibility and with the best interests of patients first.

Can insurance companies be trusted to make these decisions in a neutral and unbiased fashion? No. Never. Not so long as they are for-profit organizations. A quick review of their recent history shows the degree to which their profit motive drives behavior ranging from the slightly sleazy to the illegal to the immoral:

Insurance companies have a long history of non-payment to providers for services rendered. One common tactic is to go through the medical record, or the claims submission form and find some minor error or omission and deny payment for the whole claim on the basis of that. Or they write "edits" into their billing software which will automatically deny payment based on certain criteria. For example, if the site of service is the ER, and the ICD-9 code is that for "Gastritis" then the bill is automatically denied, under the flimsy pretext that "Gastritis" is not an emergency and thus the requirement for medical necessity is not met. This practice was so widely abused that it prompted "prudent layperson" legislation in many states, but it still persists to some degree. The insurance companies know that a certain fraction of rejected claims will simply be written off by the doctor or paid by the patient, which is pure profit for them. Additionally, insurers will automatically bundle multiple services into a lower single payment, or substitute one service for another, without any justifiable reason beyond the fact that they can. More recently, there have been news reports about how the Ingenix database, designed to provide data on "Ususal, Customary & Resonable" charges was manipulated by its owner, UnitedHealth in order to systematically underpay physician for out-of-network services.

The shenanigans of health insurers, however, have not been limited to the provider side of the equation. Patients also bear the burden of the insurance industry's drive for profits. They will delay or deny authorization for treatments which doctors recommend, or impose difficult pre-authorization requirements for documentation and necessity, all in the hopes that a certain fraction of claimants will be deterred by the morass of administrative red tape and simply lose interest and go away. A procedure which is not performed is one they don't have to pay for, which represents increased profits for the health care company. It's important to recognize that this burden increases the cost of health care for everybody, as doctors and their staff have to waste their time jousting with the insurers seeking approval (which is often denied anyway). But the insurance companies don't care about this -- why should they? They are private actors in the system rationally pursuing their own self-interest. The system can be subjected to the death of a thousand cuts, so long as their individual bottom line is protected.

Unfortunately, they don't limit themselves to prospectively limiting care provided. There's good money to be made by retrospectively denying payment for care already provided! Much of this is accomplished on the provider side, outlined above. But there are some particularly egregious practices of retroactively reviewing the applications of patients who develop expensive health problems and rescinding coverage based on minor tyopgraphical errors or immaterial omissions.

These are not accidental events. These are not the isolated actions of occasional misinformed insurance claims representatives. These are the result of deliberate policy decisions of the industry at large: intelligent policies from the perspective of an organization which is trying to efficiently pursue its financial interest. They hire people who are trained to obstruct, delay, and deny payment for services.

You can see for yourself in this dramatic, unedited documentary footage of an insurance claims manager heartlessly abusing a client:



The same phenomenon, by the way, applies in various forms to not-for-profit insurers and self-insured administered plans. Their motives are slightly differently directed, but the profit motive is ultimately the same.

Medicare, on the other hand, is not guilty of any of the above abuses. They do deny coverage for some things -- certain observation admission, SNF admission without the magic three-day admission, etc. These may be bad policy, but they are set across the board, well-publicized, and applied fairly to all patients. If you need a colonoscopy, or some other garden-variety medical service, medicare is the best insurer to have from the point of view of authorization and payment, because it's simple and hassle-free. Why? Because they do not have the profit motive to make it difficult to access care.

Medicare is not perfect. Its biggest problem is that reimbursement is set at an unsustainably low level, and subject to political forces. The advantage of having a public plan (which would not be Medicare, BTW, but an entity analogous to the FEHBP) is that the public and private insurance plans would have to compete against one another. The private plans pay well, compared to medicare, and the public plan would have to compete on this basis to maintain provider networks. On the other hand, one might expect the public plan to have better customer service and access to care, and the private plans would have to compete on this basis to enroll patients.

Anon had asked about "political" motives entering into health policy decisions. It's hard to see this becoming an operative concern. I suppose reproductive health can be highly political, but the beauty of our government is that the civil servants tend to insulate the agencies from many of the political pressures of the day, and ultimately the government is accountable to the voters. While it's possible that a future republican government might try to cut back access to abortion or contraception, I just don't see that as being likely enough to militate against the public plan option. And, if it did happen, then consumers would flock away from the public plan back into private insurance.

10 comments:

Peter said...

I do not think you understood my question. I am not asking whether you want government instead of an insurance company to make healthcare decisions, but rather if you want a third-party to make a medical decision instead of the physician and the patient within that relationship.

Kipper said...

Yeah, this is exactly the kind of thing I was complaining about on the percheron post and why I'm not too delighted with any plan that mandates that I buy insurance from commercial insurers.

litbrit said...

These are not accidental events. These are not the isolated actions of occasional misinformed insurance claims representatives. These are the result of deliberate policy decisions of the industry at large: intelligent policies from the perspective of an organization which is trying to efficiently pursue its financial interest. They hire people who are trained to obstruct, delay, and deny payment for services.

This is their business model. And until people get this--most do, but there are still, inexplicably, some holdouts, most if not all of whom are insurance industry employees or lobbyists--there will be resistance to a government-run system.

I am not asking whether you want government instead of an insurance company to make healthcare decisions, but rather if you want a third-party to make a medical decision instead of the physician and the patient within that relationship.

Read Dr. SF' post: Asked and answered! Of course no-one wants a third party making healthcare decisions that belong to a patient and his doctor. The thing is, this option does not exist, not unless the patient is paying cash, directly out of his pocket, and no coverage interest is involved. There are two choices, then: 1. Have a for-profit entity making those decisions--one whose said profits depend on denying payment of, or for, said healthcare OR 2. Have the coverage decisions made by an entity with a vested interest in keeping all citizens as healthy as possible, a function of both the moral imperative as well as the fiscally practical notion that with many conditions, preventive care and early treatment provably reduces costs later on.

For every other civilized nation in the world--and yes, we are all aware that neither the NHS nor any other system is perfect--the sanest, most moral, most ethical, and most cost-effective choice is risibly obvious. That some Americans are still not demanding healthcare from their government is a function of Big Insurance's enormous PR smokescreens (i.e. "Do you want a third party making decisions for you...?" etc. etc.) and their utterly immoral lobbying and schmoozing of our equally immoral politicians.

Anonymous said...

"While it's possible that a future republican government might try to cut back access to abortion or contraception, I just don't see that as being likely enough to militate against the public plan option. And, if it did happen, then consumers would flock away from the public plan back into private insurance."

Come to New York. My husband is a state employee and our Reproductive Endocrinologist suggested switching plans to the state EMPIRE plan because this is covered, with only copays, at much higher rates, and more cycles are allowed with full payment. Birth control (for him and her) along with abortions are covered.

Anonymous said...

Insurance companies exist to delay, deny, and dump. It's all about getting the money out of your pockets and keeping it in theirs. Anyone who's made a home or auto claim against certain carriers know this, but fail to make the conceptual leap between why insurance company A denied their roof damage claim and why insurance company B denied their septoplasty claim. If your doc isn't good at coding (or has an EMR that spits out nonsense codes), you will spend an awful lot of time listening to some high school graduate in a call center reading you a script.

I would love to be able to choose a health insurance plan that costs less than my state's high risk pool and has equivalent coverage (with no exclusions for pre-existing conditions). The private health insurance monopsony needs some competition!

Anonymous said...

yep.

but we can't get rid of 'em. their lobby is much stronger than ours.

and we're unable/unwilling to band together and put up any sort of fight. after all, residency was such a grind, and now we're done with it and living "the good life." why whould we have to put in any extra effort to make health care in this country better?

hannah said...

zomg, guys, hate to admit it but everyone else who is like ZOMG guyz, buy your insurance!11 has a) never been high-risk and/or b) never not been carried by their employer.

You're talking about a bunch of drs/nurses who will never know what it's like to need medical services but be denied. Grass is always greener, etc.

terri c said...

Another thing about the insurance industry is that, at the same time more and more people are not able to get insurance through employment, many are also being refused affordable insurance coverage because we've been diagnosed with something that makes us, in the eyes of the industry, likely to file a claim. In my case, I've been diagnosed with asthma, bulging disks, depression. Any of these 3 would make me ineligible for any individual insurance plan; thus, I'm in the high risk pool with a huge deductible just to get payments that I can have a hope of affording. I think too that in some cases employees are rewarded financially for finding ways to deny claims, which is sort of like a white collar version of the infamous Milgram experiments...

Sun Tzu said...

And governments have no ulterior motives - except 'meeting norms' and not going over budget.

It's worked so well in Britain, where nameless, faceless, accoutability-less bureaucrats have decided what drugs are worth it for what people.

Healthcare Observer said...

'It's worked so well in Britain, where nameless, faceless, accoutability-less bureaucrats have decided what drugs are worth it for what people.'

Complete nonsense. All the NICE guidance is developed by named people and includes patient groups. The controversies are mainly about experimental drugs where there is no or very little evidence of benefit/survival - if evidence does appear the guidance is revised. In the US, oncologists are increasingly discussing whether certain drugs are worth sometimes bankrupting a family for, for little gain and often less quality of life.