Healthcare providers have a slew of new tactics to pad their profits and insurance carriers are fighting back. The battle is on, but who will prevail in the end?
We all know that healthcare costs in the US are much higher than any other nation. While the pundits rail about this fact, and the feds continually promise to “do things” to combat it, it seems like a never-ending cycle. Healthcare providers (including facilities and drug makers) greedily figure out ways to charge more or sell more of their product/service, and the insurance companies figure out a way to stop, or at least reduce, the cost implications to consumers, staving off a public uproar. Here’s just a few examples of the pushing of limits by providers and attempted pull back from the carriers:
1. Facility Fees
Provider Push: A few years back, hospitals started purchasing private practices. They touted that it would give the providers stability and help with their billing, lowering their overhead. Then came the extra charges. Even though you went to the same doctor, at the same office, now you were being charged an office copay plus a new “facility fee.” Typically, the insured member would never see they were actually incurring these inflated fees because they only really see their office copay. However, even non-HSA qualified plan members were realizing the pain since facility fees are typically charged under a plan’s deductible and coinsurance.
Carrier Pull Back: Some carriers have started rejecting these extra tacked-on fees.
2. Facility Scope Creep
Provider Push: In some communities, services that typically have been provided at infusion centers are now being performed in hospitals. Chemotherapy provided in a hospital setting can cost the health plan two to three times as much as at an infusion center. But, as doctor’s practices are being bought up by hospitals, there’s now an added incentive to direct patient care to those hospitals.
Carrier Pull Back: Carriers are stepping up their precertification programs to not only review whether care is medically necessary, but also to determine if the place of care is appropriate.
3. Prescription Assistance Programs
Provider Push: The practice by drug makers of assisting their customers with the cost of their plan copays is certainly not new, but we are now finding out how these programs really work. Did you know that when a member receives assistance, that amount is being logged into the health plan, by the pharmacist, as if the member actually paid those dollars? The health plan then applies those dollars toward the member meeting their deductible and out of pocket maximum. The result is some members have been meeting their full deductible and out of pocket maximums without ever paying one dime toward them, allowing drug companies to continue to raise prices while not raising the ire of consumers.
Carrier Pull Back: Plans are tackling this loophole with new “Rx Copay Accumulator” programs, where drug company assistance does not apply toward the member’s plan deductible and out of pocket maximum.
4. PPO Plan Negotiated Fees
Provider Push: While we all know that facilities charge well over Usual, Customary & Reasonable (UCR), you may have assumed that carriers’ PPO contracts were keeping them in check. Not so. In the past, PPO negotiated fees were in the range of 125% to 150% of Medicare-like rates. Now, it is not unusual to see charges at 700% of Medicare-like rates, with the PPO capping the charges at 300% of Medicare-like rates. The insurance carrier/PPO vendor will tout that they slashed the cost in half – but it is still double what was being allowed in the past.
Non-carrier Pull Back: Because of this, reference-based pricing programs are gaining traction (at least in the self-funded arena) – these programs provide reimbursement to providers at a % of Medicare-like rates, getting back to the 125% - 150% payment level.
If only these were the lone, underhanded practices which inflate healthcare spending. I fear that the list will continue to grow as providers, facilities, and drug makers look for new ways to add to their bottom line. To those who continue to place insurance companies in the hot seat, blaming them for US health insurance cost overruns, it’s important to understand how providers, facilities, and drug companies are contributing to the problem.
Maybe the providers see the writing on the wall and want to rake in as much in profits as they can, while they can. But, this tug of war can only go on so long before one side pushes or pulls too far. It just seems to me that the more the systems are being manipulated and exploited, the faster we will find ourselves with far fewer options. Years ago I joked that one day we would all be working for either “The Government” or “The Company”. Seems I might not have been too far off – one day we’ll all be covered under either The Government (single payor) or The Company (Amazon/JP Morgan/Berkshire-type program).
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I love numbers. I'm a math geek. I read benefits industry articles and periodicals for relaxation (but, honestly, I'm still a fun gal). I also like to share what I've learned and you'll find it all here.