Health Reform Part 2

The amazing thing in the process of health reform is that neither party appears to have the slightest idea about how the actual system works. I can only assume that they have been so taken over by special interests that they lack the capacity to express anything close to what is real.

As I said in the previous comment, a big part of the problem is the reimbursement system. One additional complicating factor is balance billing. Balance billing laws prohibit physicians from charging more than the negotiated contract price, even if they do so openly.

Let's put this in perspective. Can you imagine any product or service that was price controlled such that differences in quality could not be accounted for in the price? Of course not. Yet, that's what physicians are stuck with.

The arguments in favor of preventing balance billing focus primarily on preventing physicians from adding fees that are not specifically covered by insurance. This seems like a good protection for patients, especially in th4e face of a health crisis. But, unfortunately, the baby has been thrown out with the bathwater.

The laws also prohibit the patient from negotiating with the physician. What if I want to establish an agreement that the physician will see me in no more than 10 minutes, but I'm will to pay 10% more for that? You can get express passes at Disney World, but you can't get an express pass with your physician?

Let's put some economic reason back into health care. The desire for economic reason is not at odds with a goal of ensuring all Americans have the health care they need. How someone gets health care paid for is separate from how the reimbursement system works and the mess it makes things.

Health Reform Breakdown

I started my career back in the days when we were trying to control health care costs by using certificate of need reviews. For those of you who don't remember, that was the effort in the late 1970s to control health-related capital spending. The assumption was that we were duplicating too much capital investment. Not much has changed.

Then came diagnostic related groups. I'm afraid the folks in Washington didn't figure that hospitals would figure out how to game the system. Again, health care costs kept going up.

In spite of evidence that DRGs did not work, a similar system was imposed on outpatient services based on what are called relative value units. Doctors don't get paid for an office visit, they get paid a standardized fee based on the diagnosis. If you wonder why your doctor doesn't spend time with you, it's because after somewhere between 7 and 10 minutes, they don't get paid especially well for their time.

The fact is that nothing in health care reform has even begun to address this Byzantine system that ends up requiring physicians to have specially trained staff to help them properly code their bills.

Don't think for a minute that somehow the single payer system will help all this along. The brain trust behind DRGs and RVUs is the Centers for Medicare and Medicaid Services (CMS http://www.cms.gov/).

Can we fix this mess? You bet. It starts by freeing physicians from this absurd reimbursement system and letting payments become a transaction between the patient and the doctor. Consumer driven health plans are a step, but without getting rid of the current reimbursement system, they simply cannot work. Doctors don't know what the cost of a visit will be until after the diagnosis, so price transparency is impossible. Other professionals charge for their time. Why can't doctors?