Kash on the comparative waits for health care services in Western democracies.
Washington Monthly’s piece about VHA hospitals.
The New Yorker’s excellent medical writer Atul Gawande on how a doctor is paid.
I’m going to be writing about what deregulation of health care might mean1, but I think that I’ll end up coming back to how an American doctor gets paid by insurance companies2. This is not the best way, or the only possible way, but it’s where we’re starting from. From the New Yorker article:
To get a sense of the numbers involved, I asked our physician group’s billing office for a copy of its “master fee schedule,” which lists what various insurers pay staff doctors for the care they provide. It has twenty-four columns across the top, one for each of the major insurance plans, and, running down the side, a row for every service a doctor can bill for. Our current version goes on for more than six hundred pages. Everything’s in there, with a dollar amount attached. For those who have Medicare—its payments are near the middle of the range—an office visit for a new patient with a “low complexity” problem (service No. 99203) pays $77.29. A visit for a “high complexity” problem (service No. 99205) pays $151.92. Setting a dislocated shoulder (service No. 23650) pays $275.70. Removing a bunion: $492.35. Removing an appendix: $621.31. Removing a lung: $1,662.34. The best-paid service on the list? Surgical reconstruction for a baby born without a diaphragm: $5,366.98. The lowest-paying? Trimming a patient’s nails (“any number”): $10.15. The hospital collects separately for any costs it incurs…
Doctors quickly learn that how much they make has little to do with how good they are. It largely depends on how they handle the business side of their practice. “A patient calls to schedule an appointment, and right there things can fall apart,” she said. If patients don’t have insurance, you have to see if they qualify for a state assistance program like Medicaid. If they do have insurance, you have to find out whether the insurer lists you as a valid physician. You have to make sure the insurer covers the service the patient is seeing you for and find out the stipulations that are made on that service. You have to make sure the patient has the appropriate referral number from his primary-care physician. You also have to find out if the patient has any outstanding deductibles or a co-payment to make, because patients are supposed to bring the money when they see you. “Patients find this extremely upsetting,” Parillo said. “ ‘I have insurance! Why do I have to pay for anything! I didn’t bring any money!’ Suddenly, you have to be a financial counsellor. At the same time, you feel terrible telling them not to come in unless they bring cash, check, or credit card. So you see them anyway, and now you’re going to lose twenty per cent, which is more than your margin, right off the bat.”
Even if all this gets sorted out, there’s a further gantlet of mind-numbing insurance requirements. If you’re a surgeon, you may need to obtain a separate referral number for the office visit and for any operation you perform. You may need a pre-approval number, too. Afterward, you have to record the referral numbers, the pre-approval number, the insurance-plan number, the diagnosis codes, the procedure codes, the visit codes, your tax I.D. number, and any other information the insurer requires, on the proper billing forms. “If you get anything wrong, no money—rejected,” Parillo said. Insurers also have software programs that are designed to reject certain combinations of diagnosis, procedure, and visit codes. Any rejection, and the bill comes back to the patient. Calls to the insurer produce automated menus and interminable holds.
1 After I re-read “Market-Driven Health Care”. If you’re a libertarian with an idea of what deregulation would look like, speak now.
2 For the record, a handful of doctors don’t accept insurance, only cash payment.
{ 15 comments }
Scott 04.14.05 at 2:51 pm
Like all govt programs, the VHA is both successful enough to prove the govt _deserves_ more money and power, and unsuccessful enough to prove the govt
_needs_ more money and power:
http://www.dav.org/voters/statement_ilem_040301.html
STATEMENT OF
JOY J. ILEM
ASSISTANT NATIONAL LEGISLATIVE DIRECTOR
OF THE
DISABLED AMERICAN VETERANS
BEFORE THE
HOUSE VETERANS’ AFFAIRS COMMITTEE
SUBCOMMITTEE ON HEALTH
APRIL 3, 2001
…VHA will continue to face the same problems in the future if adequate resources are not provided. In fact, its problems will most likely be compounded in the future unless aggressive steps to correct deficiencies are taken now. It is truly disgraceful that the Nation’s largest health care system has been allowed to fall into a state of disrepair and overall decline. We may be serving our veterans, but are we serving our veterans well?…
Bill Gardner 04.14.05 at 6:45 pm
Excellent post, Ted. I have been meaning to post a comment on Gewande’s article on Maternal & Child health (it’s here). You and Gewande are right about the needless stupid costs of this paperwork on doctors. Similar clerical costs fall on patients who must fight with insurers over billing, or get their pockets picked. My wife and I spend hours each month doing this, for ourselves and our dependents. We are part of a large, wasteful, but unmeasured health care cost.
Randolph Fritz 04.14.05 at 7:15 pm
“As a private practice physician, he got paid for treating patients, not for keeping them well or helping them recover faster.”
Told ya.
Nicholas Weininger 04.14.05 at 8:09 pm
OK, ted, I’ll take your bait. It seems to me deregulation would include (but not be limited to) the following:
1. getting rid of the special tax treatment for employer-provided health insurance, the original WWII mistake that helped lead to the disastrous coupling of health insurance and employment.
2. removing or reducing mandates on what insurers must cover and limits on their ability to price by individual risk. In general, whenever there is a regulation that tries to force the private provision of some cross-subsidy, it should be removed.
3. Remove regulatory barriers to entry into the insurance market and in particular to interstate expansion of competition. Ironically, here the feds might actually play a positive role, in a manner that would constitute a rare legitimate use of the interstate commerce power; they could either enforce a measure of uniformity on the morass of different state regulations, or else enact a “full faith and credit” law requiring that insurers licensed in one state be allowed to offer coverage to people in other states.
Disclaimer: I am not terribly expert on the devilish details of these things. For more professional views on how to do this, Arnold Kling’s series of health-related articles on TCS is a good place to start; Patricia Danzon also has a lot of good stuff, though it seems to be scattered about.
eudoxis 04.14.05 at 8:24 pm
“Kash on the comparative waits for health care services in Western democracies.”
Please note that the wait times shown are for inpatients. That is, the table shows mean wait times after being admitted to hospital. I knew wait times in some European countries were long (particularly the UK), but those numbers are astounding!
I should not be surprised at the Canadian numbers, (i.e. mean wait 4.5 months in hospital for kee replacement) even after we in the US take up the slack. Here at Mayo, we regularly process Canadian patients who have been on the wait list for critical surgeries. Case in point; we had a flight from Toronto with 36 lung cancer patients who needed primary tumor surgery. They came in on Friday and were on their charter back to Canada on Monday. The most recent X-ray was 6 months old!
Yes, we need to do something about people who don’t have adequate access to health care in the US. And, yes, we (as well as Europe) need to keep the costs from increasing at a dramatic pace. But please keep things in proper perspective.
rc 04.15.05 at 12:30 am
eudoxis wrote: “Please note that the times shown are for inpatients. That is, the table shows the mean wait times after being admitted to hospital.”
Nope. The authors say (see their definitions of p. 62 of the referenced article) that the patients were inpatients, but the waiting times are counted from the time the patient is added to a list for the procedure until the hospital admit date.
Scott 04.15.05 at 6:40 am
Never base a claim on a govt agency being well run, because we all know there will be article after article saying how bad things there when budget time rolls around.
http://www.pnhp.org/news/2004/october/17_million_veterans_.php
1.7 MILLION VETERANS LACKED HEALTH COVERAGE IN 2003
Harvard/Public Citizen Study Finds Sharp Increase Since 2000
…David U. Himmelstein, M.D., study author and Harvard Medical School Associate Professor, commented: “This administration professes great concern for veterans, but it’s all talk and no action. Since President Bush took office the number of uninsured vets has skyrocketed, and he’s cut VA eligibility, barring hundreds of thousands of veterans from care. Our president has put troops in harm’s way overseas and abandons them and their families once they get home….
http://www.citizen.org/publications/release.cfm?ID=7339&secID=1158&catID=126
…In 2003, 1.69 million military veterans neither had health insurance nor received ongoing care at Veterans Health Administration (VHA) hospitals or clinics. The number of uninsured veterans has increased by 235,159 since 2000. The proportion of non-elderly veterans who were uninsured rose from 9.9% in 2000 to 11.9% in 2003.
Many of the 1.69 million uninsured veterans in 2003 were effectively barred from VHA care because they had incomes above the eligibility threshold, or because of waiting lists at some VHA facilities, unaffordable co-payments for VHA specialty care, or the lack of VHA facilities in their communities. An additional 3.90 million members of veterans’ households were also uninsured and ineligible for VHA care.
The Medicare program (which covers Americans over age 65) covered virtually all Korean War and World War II veterans. However, 681,808 Vietnam-era veterans were uninsured (8.7% of the 7.85 million Vietnam-era vets). Among the 8.27 million veterans who served during “other eras†(including the Persian Gulf War), 12.1% (999,548) lacked health coverage.
More than one in three veterans under age 25 lacked health coverage, as did one in seven veterans age 25 to 44 and one in ten veterans age 45 to 65.
Many uninsured veterans had major health problems. Less than one-quarter indicated that they were in excellent health; 15.6% had a disabling chronic illness….
…While many Americans believe that all veterans can get care from the VHA, even combat veterans may not be able to obtain VHA care. The 1996 Veterans Health Care Reform Act expanded eligibility for VHA care to all veterans, but instructed the VHA to develop priority categories for enrollment. The VHA priority list includes eight priority categories, with veterans offered care based on their priority status and the resources available (Appendix)….
…In the 7 years after the passage of the Veterans Healthcare Reform Act, VHA enrollment grew 141%, from 2.9 million to 7.0 million. However, funding increased by only 60%. Because VHA funding did not keep pace with the demand for care, long waiting lists developed at many VHA facilities. By 2002, there were almost 300,000 veterans either placed on waiting lists for enrollment or forced to wait for 6 months or more in order to receive an appointment for necessary care (Memorandum from Department of Veterans Affairs to Chairs and Ranking Members of Senate and House Veterans’ Committees and VA-HUD Appropriations Sub-Committees, July 2002)….
eudoxis 04.15.05 at 12:14 pm
rc, you’re right. That makes more sense, though it doesn’t shorten the wait time. Even worse, outpatient wait times (time between gp vist to specialist referral) adds another 40% wait time in most countries (p.65). Those turnover times are simply astounding.
Ted, wait times are obviously related to capacity but procedure based renumeration appears to play only a small part in expanding capacity.
eudoxis 04.15.05 at 12:15 pm
“Your comment is awaiting moderation.” ?
Ryan Miller 04.15.05 at 1:21 pm
I lean toward the libertarian end of things, so I’ll take a crack at your challenge. I don’t know exactly what to do about the cross-subsidy problem, but I think moving the employer-tax-benefit to an individual tax writeoff/credit and eliminating the mish-mash of state rules would leave us with a system that looks more like that of airlines or cell-phones. These are fairly deregulated national industries which nonetheless have some key components regulated heavily. As there is no material barrier to their sale nationwide, the market competitively stabilizes at about 4-6 first tier firms, with some smaller niche competitors. Of course some employers offer travel and phones as a perk, especially to top execs, but most of us acquire such services on our own. Sure this wouldn’t get us to single-payer, or reduce the inelasticity of demand for health services, but it would create a much better competitive and regulatory environment, which seems like a good start.
Javier 04.15.05 at 2:09 pm
Thanks for the excellent set of links.
gaius marius 04.15.05 at 6:37 pm
i hate to rile the libertarians, but what we have IS the libertarian system. to pretend that something ideologically pure is going to come down the pike in our democracy is the cusp of lunacy.
moreover, i do not see why principle and ideology should trump empirical data. we have the example of socialized medicine, and it clearly works vastly better. wadr to mr eudoxis, your claims about wait times are anecdotal — the oecd’s are statistical. it’s cheaper. and it covers everyone, as opposed to some or most — if you think wait times are sad, consider being uncovered as an infinite wait time.
the pragmatic thing to do would be to put aside ideology and admit that there is a better model in practice that we can copy — and then copy it. once that’s done and we’re experiencing the apparent benefits, we can have the ideological debate on whether it was right or not to do so.
Scott 04.15.05 at 7:11 pm
once that’s done and we’re experiencing the apparent benefits, we can have the ideological debate on whether it was right or not to do so.
And once Iraq has been liberated (using the example of liberating Germany and Japan and turning them into democracies, thus proving it works), THEN we can have the ideological debate on whether it was right or not to do so.
You do support the war on those grounds, don’t you Gaius?
ProfWombat 04.16.05 at 7:51 pm
Government pays for close to half of medical care in America. That’s socialized medicine, folks–with henhouse security contracted out to the foxes.
Gawande’s post is exactly correct. It’s actually worse. I once had a patient who couldn’t pay me for his appendectomy–a laid-off salesman with three kids. I sent him a bill every month, and he paid me $5 or so. Now, my bill had to be for the same amount I charge Medicare patients–it’s illegal otherwise, triple damages if they ‘catch you’ with 1/3 going to anyone willing to blow the whistle on you. The dollar amount of the bill is most relevant not to actually assess the patient but to establish a ‘billing profile,’ so the percentage of your bill the third-parties actually pay, when they condescend to do so, is as high as you can get it. One can use the recommended bill-collecting leg breakers of the state medical society–yes, the society has recommended such services. I told him I don’t use bill collectors, and that he could sent me what he could. He did for a while, Then he didn’t.
The entire system should be nuked.
Uncle Kvetch 04.17.05 at 1:01 pm
And once Iraq has been liberated (using the example of liberating Germany and Japan and turning them into democracies, thus proving it works), THEN we can have the ideological debate on whether it was right or not to do so.
Scott, are you suggesting that Gaius’ proposal for transforming the American health care system would lead directly to the violent deaths of tens of thousands of people?
Of course you’re not. Your cute little “gotcha” is both breathtakingly inane and grossly offensive.
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