A patient that wanted to have their procedure at our facility this week had asked us to file insurance for them.  What we discovered when we called the insurance company on her behalf to discover the nature of her “benefits” is what has moved me to write this blog.  I think it might be useful to divulge what we were told then provide some history as to how things got this way.

If this patient had her surgery at our facility rather than at an “in network” hospital, her deductible would have been $3000 instead of $1500, her copay would have been 50% of the charge rather than 20% and none of this could happen until she agreed to a 25% penalty for coming to the Surgery Center of Oklahoma rather than one of the hospitals in the “network.” Never mind that the hospital would receive multiples of our fee from the insurance company and the patient’s copay at the hospital was more than our entire charge.

This insurance company (a huge, national insurance company) made it clear when they came on the scene here in Oklahoma many years ago that they were not interested in “contracting” with any facilities that were not hospitals or affiliated with hospitals.  Because of this, whenever we have filed an insurance claim with them on behalf of a patient treated at our facility, we have been considered “out of network.”  In order to steer patients to “in network” facilities, insurance companies like this one financially punish patients (like I have described above) for wandering out of their “network.”  

These “networks” were ostensibly devised as a means to control cost and to guide patients to quality care.  They have done the opposite.  All you  must do to see this is to compare what you were charged for your healthcare or insurance premiums 10 years ago to what you are charged now in order to realize the utter farce that the PPO and HMO concepts represent.  Fewer and fewer quality physicians have remained part of these “networks” as these organizations, cutting the physician fees every year, lost more and more of the “good ones,” physicians whose practices were too busy to mess with this type of arrangement.  

Cutting the physician fees introduced a soft form of rationing that was central to the profitability of the carrier-PPO concept, as preposterously low payment to a physician for a rendered service resulted in little of that service being rendered.  ”But wait a minute,” you say!!  ”If profitability is what drove these carrier/PPO’s, why would they want to pay more at a hospital?”  ”This doesn’t make any sense.”  It doesn’t make sense until you understand that the giant hospital bills gave the PPO’s an opportunity to profit from their repricing shenanigans, charging for the extent to which they are successful discounting these bills, as I have described previously.

The “out of network” penalties didn’t work well at first because our acceptable profit margin was so low that even what the PPO’s and carriers considered giant penalties weren’t sufficient to put us “in the red.” The carriers started to punish patients more and more aggressively, but our prices were so low that we could work with patients individually, making sure that their “out of pocket” working with us, “out of network,” was less than if they stayed in their network at the more expensive hospitals.  While these punishments were limited by statute, the carriers found ways around them that no insurance commissioner felt like challenging. (The vast majority of the funding of all state insurance commissions comes from fees paid by the insurance carriers, not the taxpayers…”whose bread I eat, his song I must sing).  

The carriers finally hit on a solution to stop the “out of network” leakage.  They made the “in” and “out” of network deductibles separate, so these deductibles didn’t cross-apply.  That meant that if you had met your $1500 deductible at an “in network” facility and you chose to go “out of network” for other care, you started at zero, your previous $1500 spent not applying toward the new and separate $3000 deductible.  The carriers had finally found their solution and it worked.  The number of patients we saw at our facility whose carrier/PPO’s adopted this form of punishment plummeted.  Their hospital pals rewarded this solution (which brought them a much larger number of patients) by giving better rates for certain hospital services.  The insurance carriers could now much more effectively loot the employer groups with their repricing fees.  Everyone but the patient or their employer won.

Increasingly aware that something was wrong, managers of employer health plans had become more skeptical when their insurance broker rambled on and on about the spiraling cost of health care and the next year’s 10% premium increase.  All the employer groups needed was for someone to post prices online to see the scam clearly.  

The tables are turning now.  Employer groups (self funded plans) are carving out more and more medical services from the carrier/PPO groups they have paid all these years to administer their health plans.  These self-funded plans represent a huge part of the health marketplace and are directly contracting with facilities like mine, securing pricing the likes of which these groups haven’t seen for decades and quality second to none.  What the self-funded plans are accomplishing will benefit everyone, as the new and growing free market in healthcare will be sending powerful price and quality signals to every area of this industry.  As prices fall and quality soars, all patients will benefit, even those who are not beneficiaries of these employer plans.  

I believe that the corporate hospitals and carriers have known for some time that their scam was unsustainable and consequently, Obamacare was more an act of desperation than anything, the last hope of these cronies to continue fleecing the sick in this country.  To give total control to those in D.C. who have enabled this scam was a huge gamble, though, as these types of organisms have a way of turning on each other, promises notwithstanding.  Maybe behind closed doors, the corporate health cronies were told “if you like your scam you can keep it.”

G. Keith Smith, M.D.

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