Healthcare is broken. As I write this, the Senate is preparing to vote on a package of Amendments to the ACA that would weaken the bill and remove some of the most unpopular provisions. They’ll get rid of the individual mandate and the employer mandate but are leaving the market to function largely as it does now; if the bill even passes. But, as our legislators prepare for yet another vote to fix our broken system I can’t help but notice that no one is addressing the actual problem. There is a shadow game that happens when it comes to pricing healthcare and there’s a tremendous amount of billing issues and practices that are not addressed within any proposed legislation. Until we begin to address some of the deeper issues with our healthcare system, change will not happen and our country will continue to spend massive amounts of taxpayer money on paying for our health care woes.
The Problem
Over the past few years we have seen massive changes in how insurance is rated, packaged and sold, particularly to individuals and small businesses. Large companies have faced massive reporting burdens and tax increases on top of their already increasing healthcare spend. These governmentally imposed burdens have also had a major impact on ancillary markets. By forcing companies to comply with complicated reporting mechanism’s many businesses have had to invest in new technology to manage their workforce and track reporting requirements. On one side, this is a good thing. HR departments are woefully behind most other departments at businesses and anything to keep a business streamlined and efficient will help them thrive. However, there is a cost associated with this and the benefit, while I believe true, may not be as big as we believed it would be. Our company provides these types of platforms and in many cases we have saved businesses tons of time and money. However, many businesses fail to understand a new process and technology ends up being a drag. Benefits Admin technology is not a panacea and it certainly is not going to lower costs so dramatically to make up for increases in healthcare. So, we’ve been distracted by confusion for a few years. Businesses plowed time and money into technology to meet compliance metrics and ended up spending very little time asking themselves what the real issue was here.
The issue, as I have come to see, and pretty much everyone agrees with, is that there is a tremendous amount of fraud, waste and abuse in healthcare. There is a complex game of shadow pricing or outright non-pricing that takes place for very large ticket items. If you don’t understand what I’m talking about then just try and call your local hospital and ask what they will charge your insurance for an MRI. They simply won’t answer you. They may say they do not know and they may say that they can’t bill until afterwards but you most likely will not have any definite answer. But as my firm has been learning it doesn’t stop there. Not only do you not know what you will pay, but you also cannot even get an itemized bill before or after a treatment. Just look at your last hospital bill. You will see that you will have an amount owed and at most you will get a very generalized itemization of services such as “surgery” or “physician bill”. However, there are a number of coded procedures in either of those cases depending on what you have done and many times your bill includes services you either did not receive or are outrageously priced.
Let me give you an example. On a recent claims breakdown, one of our partner firms found that a hospital billed a patient $1050 for an oral cleansing device. This device is also known as a toothbrush. Another example showed that a hospital billed over $500 for one Tylenol tablet. This is outrageous, but what is more outrageous is that the carrier actually pays these. Time and time again we have found that there are not only major areas of abuse on provider bills but that the carriers are continually paying them. The reason for this is that your typical health insurance carrier has set up their claims payment system for speed. Their reasoning they provide their clients for this is that they do not want any headaches for their members. But what we truly see going on here is that their system is set up to pay quickly because they don’t have any good reason, financially to keep claims as low as possible. True, they don’t want them to go too high, but they don’t want them to be as low as they could be either because then they could not charge you higher and higher premiums year after year. The sad fact is that carriers typically audit less than 5% of claims billed to them but studies are showing that over 90% of all claims billed have errors. This is a huge problem and one that will continue to plague healthcare costs until something changes. And that something is NOT going to come from Washington or from the current system.
The Solution
So, what can be done when providers are charging you an arm and a leg for services you may or may not need and your insurance carrier, the means of paying for healthcare, is paying them without any thought for lowering or justifying your costs? Luckily, there are a growing number of companies who are starting to specialize in focusing on areas of waste and eliminating them. Many of you may have heard of medical auditing in the past but there was a huge problem here. The carrier who has control of the claims data typically refuses to provide any meaningful or accurate data for an audit and the process typically led companies to believe that things were just too complicated.
Technology is starting to fuel a revolution in how healthcare is paid for and it’s providing for a level of transparency that’s never existed in healthcare. Many TPA’s (third party administrators) are able to more efficiently manage costs because of their administrative technology that allows them to catch areas of waste as mentioned above, eliminate them, and keep the provider honest. Moving to this model has saved businesses roughly 25% on average and typically keeps a group at a flat trend year over year. How would you like to cut your costs by 25% and keep them there? That’s what this new realm of healthcare offers.
As we all know, change can be painful. And that’s what is holding many businesses back from looking at a TPA to manage their health plan. From our perspective as brokers, this change is not all that painful. Your members still have access to top tier networks and claims are still paid timely, just after the waste has been cut out. And, if we’re being honest, what is more painful? Having an employee have an issue with their provider processing their claims incorrectly or paying 10% or more in increases on your entire group year in and out? Fixing a claim submission is solvable. Saving money under the current system is not.
We encourage you to look outside of the box for solutions to your health plan. In some cases, maybe you are best off staying with your current carrier arrangement. Whatever you do, it’s imperative that you start to move to a more transparent model and that you have a partner managing your health plan that provides you real data and real costs breakdowns. Without these, businesses will never be able to reign in their 2nd largest line item and they’ll always be scrambling to sell more here or cut more there to maintain benefits for their employees. The time for change has come. Let’s not wait on Washington to get us out of this mess, let’s clean this up ourselves.