This is a part of an ongoing series on medical coding, billing, and reimbursement.
Previous posts are here:
In my previous post, I suggested that there may be simpler, more effective ways to manage reimbursement in health care. Clearly, the current system is broken. Health care costs have been spiraling despite aggressive attempts by insurance carriers to control them, using coercive methods of regulation and market dominance, and neither managed-care nor burgeoning federal regulation has succeeded in bringing them under control. These measures have only succeeded in vastly increasing the complexity and resources required to provide health care. Physicians are under growing pressures of both time and energy to meet the extraordinary paperwork load and time requirements to master and comply with this excessive regulatory environment.
In arriving at some potential solutions to this growing crisis, I have attempted to go back to core principles based on an understanding of human nature and motivation, striving for three major goals: simplicity, transparency, and accountability. I am under no illusion that such changes in our massive, complex, and politically-charged system will be easy to implement. Nevertheless, it is time to begin rethinking our entire system, before its problems become so burdensome that the quality of our health care delivery deteriorates drastically. Whether the political and social will exist to make such drastic changes is, of course, a very open question.
We are currently expending a huge amount of resources simply sustaining the current system, which are therefore not available for the actual provision of health care. Hence we have health care costs taking an increasingly large percentage of the federal budget; health insurance premiums eroding employee earnings and employer profits; and decreasing access of patients to physicians due to financially unsustainable entitlement programs which no longer cover even the cost of providing care. The rapid-fire nature of our information-based society, with media and Internet, has tended to create an endless series of daily crises, many of which prove to be nonexistent over time. Meanwhile, under the radar, the health-care morass continues to grow into a gargantuan issue, with little fresh thinking, and little media attention given the magnitude of the problem and its potential to impact all of our lives.
I hope to put forward here a few simple ideas. I make no claim to any expertise in the area of health care policy, other than nearly 30 years of day-to-day patient care, with the resulting cumulative experience in a system which is rapidly becoming unworkable. Our health care system is extraordinarily complex, and I am not naive enough to believe that such simple ideas will solve every problem which its complexity and scope presents. Nevertheless, I believe that by applying core principles, rather than continuing on present flawed assumptions, the potential for genuinely profound changes in our health care delivery system is substantial.
Here are some proposals for reforming the health-care system.
â™¦ Pay physicians by time: In virtually every profession and avocation, including law, accounting, consulting, and most trades, the primary measure of one’s efforts is the time spent performing the task at which you are trained and skilled. The hourly rate will, of course, vary widely based on your profession, training, and expertise; but, by and large, the time you spend on a task is well-correlated with its economic value.
The exception to this, as I have pointed out in lurid detail in previous posts, is the health-care profession. We have evolved an extraordinarily complex system of service codes, diagnosis codes, and business rules and regulations which have become so convoluted and contradictory that virtually no one can master them. We hire additional employees, requiring specialized training, in an attempt to delegate much of these efforts, with only marginal success, as the rules are both constantly changing, and vary widely from one insurance carrier to another, one federal health-care program to the next. As a result, much effort and many resources are expended in simply getting properly and fairly reimbursed for one’s services and expertise. A physician who must expend substantial time and energy, and squander substantial business overhead, managing such a system is obviously no longer solely focused on the provision of his primary skill, the practice of medicine.
Paying physicians solely by time spent would, I believe, drastically alter this equation, and significantly change motivation and incentives to be more in line with what both physicians and patients seek. If you examine any study on patient’s complaints about the health-care system, you’ll find at the top of nearly every list of complaints two issues: physicians do not spend enough time with their patients, and patients have to wait too long to see the doctor. Of course, some of these complaints arise from physician personality problems or practice management issues–but in no small part, they arise from the perverse incentives and necessities generated by our current system. Since physicians are paid per unit service, it is in their best interest financially–and increasingly a financial necessity–to see as many patients as possible in order to generate sufficient revenue to sustain their increasingly costly medical practices. The high overhead thus required by extra employees and employee benefits, dictation costs, the overall rise in medical practice expenses and malpractice premiums, require that physicians often see as many patients as possible–thus resulting in over-scheduling and rushed visits.
Imagine how transformative it might be to simply pay the physician based on the time he spends with the patient. The incentives are suddenly flipped: the physician is now motivated to spend more time with you, since time is money. There’s no need to cram a high volume of services into one’s day to make ends meet, since you will be paid simply based on the time you have spent with patients–whether they be few or many. Practice overhead would drop drastically, as the need for highly-trained medical billers would disappear. Time is a very simple parameter to measure, and easily understood by both patients, physicians, and staff, reducing much of the confusion which now exists with our existing service code-based structure.
Paying physicians by time is not without challenges, obviously. Unlike legal or accounting services, for example, there are significant differences in the types of services provided by physicians to patients. Physicians may be engaged primarily in interacting with their patients in an office setting; in a hospital or intensive care unit; in surgery; performing procedures. While one might hope for a fixed hourly rate, for example, established by negotiation with an insurance carrier (more on this later) or set by the physicians themselves, different hourly rates for different broad categories of services may prove necessary. While time is in general an excellent indicator of complexity of service, there are circumstances in which time alone does not entirely reflect accurately on skill or expertise. For example, an inexperienced surgeon will likely take significantly longer on a given surgery than one who has many years of experience, since acquired surgical skills make for greater efficiency. Ultimately this may be solved by a system where more experienced physicians, or those with demonstrated efficiency and competency, recoup a better hourly rate. This would be consistent with other professions, where reputation, experience and expertise in given areas command higher hourly pay.
Some areas of medicine are not amenable to a time-based payment system: laboratory work, for example, and certain minor procedures. These might be better suited for alternative means of payment based on units rather than time. But a major move away from paying for most medical services based on multi-level service codes is highly desirable.
Time-based reimbursement would, with a single stroke, eliminate our inscrutable system of procedural and diagnosis codes, which are all but impossible to master, and which suck up extraordinary resources. If implemented fully, it is virtually certain that overall costs for medical care would decrease, as physicians would be able to significantly reduce their overhead, and therefore charge less to make a comparable income. Expensive electronic medical record systems (now touted as the savior of our health-care system, which they most certainly will not be) would no longer be mandatory, except as a convenience for documentation. Their current function is primarily that of automating complex coding rules and thereby keeping physicians one step ahead of federal and insurance auditors. Time is an extremely easy quantity to audit, and documentation could be reduced to core essentials, rather than pages of needless detail written simply to satisfy federal guidelines and insurance carrier requirements. Time is also an extremely easy parameter for patients to grasp: the doctor who bills a one-hour visit, when he only saw you for 15 minutes, is easily reported for dishonesty, whereas under the current system it is impossible for patients to assess whether their service coding is appropriate for their visit or not.
Time-based reimbursement would also provide an immediate reduction in the need for large federal and insurance bureaucracies, which exist now primarily to assess, review, monitor, and expedite reimbursement in our current labyrinthine system. Don’t be surprised, however, if such proposals would be vigorously opposed, especially by the insurance industry, which uses the complexity of the current system to reap bodacious profits. Complexity is bad for our health and bad for our economics–but is highly profitable for certain segments of the health-care economy, who by sheer size, market dominance, and massive resources have learned how to turn garbage into gold.
And this brings us to the second component of payment reform, which is health-care insurance:
â™¦ Dismantle the dysfunctional relationship between health-care payers and health-care providers: This one is going to ruffle some feathers. The current private health-care insurance industry makes huge profits by acting as the middleman between the patient and provider. They use the complexity of the system to deny payments for legitimate medical services, to reduce reimbursement to physicians, while raising premiums purportedly justified by climbing health-care costs. The insurance industry as it now exists represents a huge bureaucratic black hole, which sucks in massive amounts of health-care dollars in administration and profits for the company and their CEOs. An obscene percentage of health care dollars is now spent feeding this beast; it’s time to slay the dragon.
Here’s how I would structure the insurance industry to restore some sanity: I would mandate that universal catastrophic coverage be required for all, with very large deductibles, perhaps $25,000. While I am not generally a fan of mandates, the current formidable percentage of uninsured represents a huge tax on those who do carry insurance. In Washington state, for example, I cannot drive a car without car insurance; I cannot get a mortgage on my house without homeowners insurance. The reason for these requirements is simple: if disaster strikes, and I am uninsured, someone else has to foot the bill. Universal, catastrophic coverage, being broadly-based, would be relatively inexpensive; those who are unable to afford it could be subsidized through state or federal programs, via a system far simpler than our current Medicare or Medicaid eligibility system. Of course, this would involve means testing–which is the only rational way of providing federal subsidies to the poor and elderly, but anathema to the socialists in our midst. Relatively few people would be financially devastated by a loss of $25,000 for a major illness (although it would certainly be a financial strain for many), and therefore catastrophic coverage would protect against such a financial disaster–which often results in bankruptcy.
To cover this large deductible, secondary policies would be available, paid either by individuals or their employers. However these plans would not make payments to physicians; they would reimburse patients for their health care costs. The patients themselves would be the contact point for payment; they would be the ones who actually pay the physician’s bill. This was the original concept in health insurance, and it has many advantages.
First of all, there is simplicity: the patient pays the physician’s bill, submits the claim, and is reimbursed for all, or a portion, of their health-care expenses. The physician gets paid up front, which reduces his overhead, and allows him or her to charge lower fees; the patient knows exactly what his health-care costs are at the point of service. This provides accountability with the physician as well, who must explain to the patient why their fees are so high.
The patient and the insurance company then become direct, accountable business partners; when the insurance company refuses to pay their claim, it is the person paying the premium who knows about it immediately, who can then complain or seek redress directly with the insurance company. No more letters to patients about physicians providing “medically unnecessary” care; no more convoluted denials based on blackbox coding edits; no more long delays as the insurance company stalls payment, knowing that the physician’s practice is overwhelmed with countless other claims denials and may just write it off.
When the patient is denied reimbursement for their care, they will demand to know why, and if unsatisfied, will find another insurance carrier for their health-care coverage. Accountability and transparency are built into the system. Insurance companies would soon be out of the business of dictating which medical services are appropriate, and which are not–a role which has never been appropriate for a third-party insurer. Furthermore, this system would allow physicians flexibility to provide reduced fee or charity care for the needy, without the risk of becoming ensnared in federal fraud regulations or insurance contractual violations. Amazingly enough, if I choose to forgo a co-payment or deductible for a poor Medicare patient, I am guilty of fraud. That’s how perverse our current system has become. Want to accept a gift, or food, or a bottle of homemade wine for your services instead of cash? Fraud under the current system, but ennobling and satisfying for both patient and physician under this reform.
Lastly, in this system reform, I would
â™¦ Provide tax credits for physicians to see the poor. I have written about this previously. The number of uninsured individuals in our country is large and growing, and represents a genuine scandal for such a wealthy nation. The current Medicaid system is degrading for the individual who needs it, and is onerous and punitive for physicians who choose to accept their payments. For many–especially since the reform of the Medicaid system–such coverage is not even available as an option. Hence the uninsured pour into emergency rooms (where legally they cannot be turned away), where they receive expensive care without emphasis on prevention or adequate maintenance or follow-up.
The institution of tax credits–not deductions–would provide physicians with an immediate incentive to see the poor. It need not be on a dollar-for-dollar basis; there could also be a cap on this credit per year. In Washington state, over 50% of physicians no longer see Medicaid patients–not because they have a desire to deny care to these individuals, but because reimbursement rates are so low they no longer cover expenses, and because the system is punitive, bureaucratic, arbitrary, and complex. As a result, many Medicaid patients find it nearly impossible to find even primary care physicians who will see them, much less specialists. Medicare is not far behind in this shameful dereliction of responsibility. By providing tax credits to care for those who cannot afford insurance, physicians would have a direct financial incentive to see the poor, and the massive bureaucratic administration now managing Medicaid health-care payments would become obsolete overnight. The money saved by such bureaucratic reduction would go a long way toward subsidizing universal catastrophic coverage or meeting non-medical programs such as job training and housing.
There are, no doubt, many challenges with such a simplified approach to health care reimbursement: our health-care system is expensive, very complex, and many players have a vested interest in the system as it now stands. But for those of us on the front lines–physicians, other health-care providers, and patients–drastic changes must begin, lest our system implode under its own weight. The hurdles to change are far less conceptual and practical than political: one can only begin to imagine the heated rhetoric about greedy doctors, charges of abandoning the poor, and other verbal invectives which have become the currency of our dark political age. However, if we do not begin to move away from our current system, and demand that those whom we elect bring about such radical changes, we will have no one but ourselves to blame when the gleaming luxury liner of our health-care system runs aground on the jagged rocks of reality.