Repairing the Healthcare System: Can Physicians Trust the Healthcare Insurance Industry?

Stanley Feld M.D. FACP, MACE

We have established that physician fees are not the cause of the soaring healthcare costs. We have not looked at how the healthcare insurance industry tortures physicians with its adjudication of their insurance claims. MILT FREUDENHEIM in The Check Is Not In The Mail accurately describes the physician’s pain in receiving reimbursement from the healthcare insurance industry.

Every physician has experienced delays in payments as well as missed payments. Many physicians’ practices do not have the best accounting systems in the world. The practice management systems can easily overlook non-reimbursed claims for months or forever. Many physicians’ practices have outsourced their billing functions because it is too expensive and inefficient to do it in the office. This has lead to more problems and higher costs. The non–payment of claims leads to greater profits for the healthcare insurance company.

Does the fee charged by the physician get added into next year’s insurance premium charged to the employer buying the insurance for the employee? Does the insurance company credit its profits from the float toward the next year’s premium from its delayed payments? My guess is no.

Physicians pay $6,000 to 20,000 per year per physician just to file and administer insurance claims. They lose countless numbers of dollars from non-payment of claims. The lose countless numbers of dollars from miscoding claims. They loss countless numbers of dollars from the healthcare insurance company’s scrubbing of healthcare claims. There are entire subdivisions in healthcare insurance companies that scrub claims. A simple explanation of claim scrubbing is, if the diagnosis on the claim does not support the procedure, the procedure is eliminated from the claim in calculating the reimbursement to the physician even if the claim is justified medically. Many times the EOB (explanation of benefits) meaning is so opaque that one cannot tell what has been scrubbed out of the reimbursement. A physician’s office can call the insurance company and try to get an answer. However, it is difficult, time consuming, costly and often unsuccessful. Many times I believe it is purposeful on the part of the healthcare insurance company. I believe the goal is to delay payment as long as possible.

Another trick used by the insurance company is to say it never received the claim. Typically, the physician’s office waits a few months until it discovers the claim has not been paid. Then the physician’s office contacts the insurance company. The process of resubmitting the claim and getting paid takes at least another 30 to 60 days. This purposeful inefficiency takes place despite electronic billing.

“Few things rankle a doctor more than an insurance company's saying it cannot find a claim for medical services. Particularly when there is even a signed return receipt to document delivery of the bill.”
"We actually had the little green card to show who signed for the dang thing," said Elizabeth Wertz, chief executive of the Pediatric Alliance, a large group of Pittsburgh doctors. "We sent it by certified mail. The insurance company said they didn't have it."

The insurance industry is playing to the physicians’ weakness to increase the profit from the float.

“The claim was for several thousand dollars, according to Ms. Wertz, who declined to identify the company, a large regional insurer, for fear of making it more difficult to wrangle payments from the insurance company.”
“ It is a problem known to many doctors as they struggle to balance the rising cost of providing patient care with what they see as reluctance by some powerful insurers to pay promptly.”
“Tardiness or refusal to pay what doctors consider legitimate medical claims may add as much as 15 to 20 percent in overhead costs for physicians, forcing them to pursue those claims or pass along the costs to other patients, according to Jack Lewin, a family doctor who is chief executive of the California Medical Association, a professional group of 35,000 physicians.”

I am aware of a practice in California in which the insurance carrier is 1 year behind in payment and owes the practice $400,000.

How can the healthcare system stop this destructive pattern and dysfunctional behavior? If the patient owned his healthcare dollar, and knew the price he was going to be charged was the price the insurance company negotiated with the physician, the patient could pay at the point of service decreasing the physicians overhead by 15 to 20%. The saving could be passed on to the patient in the form of a reduced fee. The fee reduction would happen only in a competitive environment. I believe physicians would agree to this simply to relieve them of all the stress and costs of collections.

The float is between 29 and 44 days depending on the carrier. Athenahealth a claims-processing company, has published a rare warts-and-all look at how well — or not — the nation's seven biggest health insurers pay their bills. Athenahealth measured many parameters such as days in account receivable, percentage of claims successfully resolved on initial submission, % of patient liability, denial rate and denial transparency to name of few. The Athenahealth results give us an idea of the unconscionable behavior of the healthcare insurance industry. The tactic plays to the weakness of physicians’ practices and take advantage of both the physician and the patient.

Ms. Wertz, the Pediatric Alliance's chief executive, says some insurers' telephone call centers limit claims-related issues to 10 per call. "That's incredibly inefficient," she said. "We see thousands of patients. Our people have to sit on phone 30 minutes to get a live person."

Athenahealth's other measurements included the percentage of claims paid without changes within 90 days. Medicare came in first, at 92 percent. Champus/Tricare was last, at 85.1 percent.

It should be clear that the way around this waste and abuse is with an Ideal Medical Savings Account. It would motivate the patient to shop for a doctor, and to shop for a good insurance company. The insurance companies would compete on price and quality of product. We have seen the same apathy for reform in American automotive companies until the Japanese gave the American consumer a choice. Now they are trying to catch up.

Who would lose? The slow to reform healthcare insurance company who has abused the healthcare system for many years? Do you think it wants to give up the power it has over physicians and patients? The only way to stop it is with appropriate government regulation, giving patients the power to own their healthcare dollar and total price transparency. It is going to require political leadership that can only be stimulated by consumer demand. Consumer demand will result from understanding the dysfunctional elements of the healthcare system.