Health care is a tremendously emotional subject, but in order to get the emotions right, it needs to be looked at logically.
This is about one small part of the mess that is health care delivery. My premise is we don't need delivery, we need common sense. This is not meant to show how all of health care should work, only the one small part that is the simple act of going to a doctor. This process is made much more complicated than it needs to be with a system that delivers health care.
I know, I know, I hate math too, probably even more than you do! However, this is important enough that you should all pay attention for the few minutes it will take to read this. I'm about to build a very logical case for looking differently at a very emotional subject - your health care.
The health insurance companies have been stealing your money for years by telling you that doctor visits are just too outrageously expensive. They've convinced you - and your doctor - that you have to have insurance to go to a doctor.
It works like this: you visit a doctor and a few days later you get a copy of the bill that went to the insurance company. This bill will say something like, "the total amount that it cost to see the doctor was $225.00". Now you just got your pay stub the other day and on there was the amount that was withheld for health insurance. That was, let's say, $225.00 for two weeks. ($450.00 a month is about average right now). If yours is different, humor me and don't get hung up on that number. The emotional part is that you breathe a huge sigh of relief that you had insurance so you could go to the doctor and you don't have to pay the $225.00. The logical part is that you pay twice that amount every month to see a doctor maybe four times a year. You look at that doctor bill, (it says this is just your copy and not a bill,) and thank the great employment god that you're one of the fortunate ones that has insurance.
What many of us ignore is even more important. Three to four months down the road you get the EOB, (Explanation of Benefits) letter. It comes from your health insurance company. This letter is written in insurance gobbledygook, or whatever the insurance companies insist is communication, and among that entire jumble of abbreviations and codes - is the absolute most important part. (Pay close attention to that, because that is truly what health care costs.) That is the part where the insurance company actually states how much they reimbursed your doctor. Most of the time that amount is somewhere between 25% and 35% of what was billed. You throw the EOB letter away or file it away and breathe another huge sigh of relief that at least the insurance company paid the doctor. The one thing most of us DO notice is the amount still owing - generally $0.00. (WHEW!) I mean they are taking nearly $450.00 a month out of your check. You should get something from that, right?
I'm here to tell you that when you unravel the Gordian knot of health care delivery - what most people call health insurance - it's all a scam. You're paying $5400.00 dollars a year for $35.00 doctor co-pays. It's a scam. It's a waste and it's stupid.
I'll say that again. It's a scam! It's a waste! And it's stupid!
Here's how it works. You go into the doctor and pay your co-pay. That is the only money your doctor sees for at least 90 to 120 days. Your doctor fills in your chart during and after the visit and turns that over to billing and coding. The billing department then turns what the doctor did with you in the examination room into a billing "code" (PPO RATE). This code is the basis for what the insurance company pays the doctor. There is no payment for the amount of time spent, or the extent of the knowledge he/she needed to acquire to make a diagnosis or treat you, or any sort of logical criteria. What she's paid is strictly based on the PPO code.
The PPO code tells the billing office how much the doctor's office should bill the insurance company in a dollar amount. Lets say that code xv1234 (Not a real code, I don't know the code.) and the amount the code says the doctor should bill the insurance company - $225.00. Also at this point you get a copy of the billing that went to the insurance company. The actual bill goes to the insurance company. Remember, this is when you see that the actual amount the doctor billed was $225.00.
The doctor's billing office spent anywhere from 30 to 60 minutes to code this bill, print it out, print out a copy for you and mail it out, plus do all the processing for their office. At the insurance company office now, the bill gets shuffled around and finally put into the process and goes on into claims. It gets shoved on the bottom of a stack with thousands of other claims.
Here is the part that keeps your doctor's money from her. By law, the insurance company must respond within 30 days. So, on day 30, the billing office gets a form from the insurance company asking about the purpose of the visit - in other words, what symptoms did you exhibit that caused you to visit the doctor. It's a form that could take another 30 to 60 minutes to process, record for the interoffice records and mail it out again. Remember, every piece of paperwork that comes in or goes out, must be processed in the doctor's office. This new form now goes back to the insurance company claims department where it gets put back into their process and goes into the stack. Processing of paperwork is a time consuming and money gobbling procedure that is an inherent part of our beloved health care delivery system.
Once again, the insurance company must respond in 30 days, so on day 30, another form arrives at the billing office. This form is asking how the doctor treated the condition that you came in for. This requires another 30 to 60 minutes of billing office time. This is important, because if the doctor has stepped out of the normal and accepted practices of treatment - normal and accepted according to the insurance company - your doctor will not be reimbursed.
So far, the doctor has waited 60 days for his/her money. He/She'll wait another 30 to 60 days to get it while the insurance company claims department processes the paperwork necessary to reimburse the doctor. At the end, the doctor gets $50.00 for the time she spent with you. So let's say that you paid a $30.00 co-pay. The doctor got $80.00 for those eight minutes she spent with you.
HOWEVER, most of that money doesn't go to the doctor. It goes toward the process to get the money from the insurance company. As much as $60.00 could be spent in the doctor's billing office processing health insurance company paperwork, plus the normal overhead in the practice of medicine. So in the end, as much as $60.00 of the $80.00 that went to the doctor (75%) has been wasted.
Of the $80.00 that went though the doctor's office for that visit - only $20.00 actually ended up in the doctor's pocket. Is it any wonder that the doctor must see 20 or more patients a day to make it? Is it any wonder that you actually get less than ten minutes face time with your doctor?
I've just pulled apart one small portion of the hopelessly tangled Gordian knot of health care delivery. I'm about to show you how one doctor's visit profits everyone in the system but the two it should - you and your doctor.
I'm often asked after this point in a discussion, a couple of questions.
1.) If it's so bad for the doctors, why do they do it that way?
2.) Why does it work that way?
The answer to question number one is sort of a two part answer. The first part is that most doctors aren't even aware of the finances associated with their practice. That's why they hire a business manager. It is a very rare occasion when a doctor audits his/her books to see if there is a more efficient way of practicing the art of health care. If their practice isn't doing well enough, they just look to take on more patients - that means they work harder - not necessarily smarter. The second part of the answer to question number 1 is that since they were in medical school doctors have been taught that, "this is the way you set up your practice." They are told from early on to take as many insurance patients as possible, so that they can have as many patients as possible.
This leads us to the answer to question number 2, "Why does it work that way?" The reason it works that way is that besides the health insurance companies making money from every doctor visit that is billed through them, the AMA does as well. That's right, the same AMA that for years we trusted as our source for "good" health care information. The same AMA that we have all assumed is looking out for us and for doctors. The very same AMA who helped write the health care reform law. (As a part of their cooperation on endorsing health care reform they no doubt got concessions, only time and exposure will tell what those concessions are.) That same AMA makes money every time a claim is filed with a health insurance company. Because, here's the deal, the AMA owns the royalties to all of the billing codes - remember the billing codes? They own the royalties to those and they profit massively from those royalties. It is the same AMA that also does a lot to determine the curriculum at the medical schools. So it makes a lot of sense that the medical schools teach doctors to "bill as much insurance as you can."
You see. it really is a numbers game. The unfortunate part of that is that unless you know the rules and the numbers, and understand how to play the game - you lose… and your doctor loses… every time.
You paid a $30.00 co pay for your doctor visit. Your doctor waited 120 days and got another $50.00 for a total of $80.00. After she paid her billing and collections department to collect that amount she, made a profit of $20.00. (Yes, if you stop to figure that out, it cost her $60.00 to collect $50.00. But the billing department has to earn their keep too, I guess.)
The health insurance company, based on the number of people in your risk pool and the premiums paid by that group, collected roughly $150.00 for that visit, for which they paid out $50.00. After they pay for the claims department, overhead, and other expenses, they walk away with $10.00 profit after the $50.00 they paid out. (This is according to the new government regulations in the PPACA.) Remember though, this happens millions of times every day in America - some insurance companies pay out a million dollars in claims every single day. And by law, if they pay out $1,000,000.00, they make $200,000.00.
Also in on the scam is the AMA. They collect a royalty for the billing codes that the doctor has to use to wring money out of the tightly clenched fist of the health insurance company.
Who else profited from this deal? Well, in all likelihood, there was a prescription written, because more than half of all doctor visits end up with a prescription in the end. So the drug company made some cash as well as the pharmacy. Plus, the insurance company made about 20% on the claim they paid for the pharmacy bill. While all of this does keep a lot of people employed, I suppose, it's a HUGE waste of money!!!
This is a two part article so be watching for part two "The Solution"
This is about one small part of the mess that is health care delivery. My premise is we don't need delivery, we need common sense. This is not meant to show how all of health care should work, only the one small part that is the simple act of going to a doctor. This process is made much more complicated than it needs to be with a system that delivers health care.
I know, I know, I hate math too, probably even more than you do! However, this is important enough that you should all pay attention for the few minutes it will take to read this. I'm about to build a very logical case for looking differently at a very emotional subject - your health care.
The health insurance companies have been stealing your money for years by telling you that doctor visits are just too outrageously expensive. They've convinced you - and your doctor - that you have to have insurance to go to a doctor.
It works like this: you visit a doctor and a few days later you get a copy of the bill that went to the insurance company. This bill will say something like, "the total amount that it cost to see the doctor was $225.00". Now you just got your pay stub the other day and on there was the amount that was withheld for health insurance. That was, let's say, $225.00 for two weeks. ($450.00 a month is about average right now). If yours is different, humor me and don't get hung up on that number. The emotional part is that you breathe a huge sigh of relief that you had insurance so you could go to the doctor and you don't have to pay the $225.00. The logical part is that you pay twice that amount every month to see a doctor maybe four times a year. You look at that doctor bill, (it says this is just your copy and not a bill,) and thank the great employment god that you're one of the fortunate ones that has insurance.
What many of us ignore is even more important. Three to four months down the road you get the EOB, (Explanation of Benefits) letter. It comes from your health insurance company. This letter is written in insurance gobbledygook, or whatever the insurance companies insist is communication, and among that entire jumble of abbreviations and codes - is the absolute most important part. (Pay close attention to that, because that is truly what health care costs.) That is the part where the insurance company actually states how much they reimbursed your doctor. Most of the time that amount is somewhere between 25% and 35% of what was billed. You throw the EOB letter away or file it away and breathe another huge sigh of relief that at least the insurance company paid the doctor. The one thing most of us DO notice is the amount still owing - generally $0.00. (WHEW!) I mean they are taking nearly $450.00 a month out of your check. You should get something from that, right?
I'm here to tell you that when you unravel the Gordian knot of health care delivery - what most people call health insurance - it's all a scam. You're paying $5400.00 dollars a year for $35.00 doctor co-pays. It's a scam. It's a waste and it's stupid.
I'll say that again. It's a scam! It's a waste! And it's stupid!
Here's how it works. You go into the doctor and pay your co-pay. That is the only money your doctor sees for at least 90 to 120 days. Your doctor fills in your chart during and after the visit and turns that over to billing and coding. The billing department then turns what the doctor did with you in the examination room into a billing "code" (PPO RATE). This code is the basis for what the insurance company pays the doctor. There is no payment for the amount of time spent, or the extent of the knowledge he/she needed to acquire to make a diagnosis or treat you, or any sort of logical criteria. What she's paid is strictly based on the PPO code.
The PPO code tells the billing office how much the doctor's office should bill the insurance company in a dollar amount. Lets say that code xv1234 (Not a real code, I don't know the code.) and the amount the code says the doctor should bill the insurance company - $225.00. Also at this point you get a copy of the billing that went to the insurance company. The actual bill goes to the insurance company. Remember, this is when you see that the actual amount the doctor billed was $225.00.
The doctor's billing office spent anywhere from 30 to 60 minutes to code this bill, print it out, print out a copy for you and mail it out, plus do all the processing for their office. At the insurance company office now, the bill gets shuffled around and finally put into the process and goes on into claims. It gets shoved on the bottom of a stack with thousands of other claims.
Here is the part that keeps your doctor's money from her. By law, the insurance company must respond within 30 days. So, on day 30, the billing office gets a form from the insurance company asking about the purpose of the visit - in other words, what symptoms did you exhibit that caused you to visit the doctor. It's a form that could take another 30 to 60 minutes to process, record for the interoffice records and mail it out again. Remember, every piece of paperwork that comes in or goes out, must be processed in the doctor's office. This new form now goes back to the insurance company claims department where it gets put back into their process and goes into the stack. Processing of paperwork is a time consuming and money gobbling procedure that is an inherent part of our beloved health care delivery system.
Once again, the insurance company must respond in 30 days, so on day 30, another form arrives at the billing office. This form is asking how the doctor treated the condition that you came in for. This requires another 30 to 60 minutes of billing office time. This is important, because if the doctor has stepped out of the normal and accepted practices of treatment - normal and accepted according to the insurance company - your doctor will not be reimbursed.
So far, the doctor has waited 60 days for his/her money. He/She'll wait another 30 to 60 days to get it while the insurance company claims department processes the paperwork necessary to reimburse the doctor. At the end, the doctor gets $50.00 for the time she spent with you. So let's say that you paid a $30.00 co-pay. The doctor got $80.00 for those eight minutes she spent with you.
HOWEVER, most of that money doesn't go to the doctor. It goes toward the process to get the money from the insurance company. As much as $60.00 could be spent in the doctor's billing office processing health insurance company paperwork, plus the normal overhead in the practice of medicine. So in the end, as much as $60.00 of the $80.00 that went to the doctor (75%) has been wasted.
Of the $80.00 that went though the doctor's office for that visit - only $20.00 actually ended up in the doctor's pocket. Is it any wonder that the doctor must see 20 or more patients a day to make it? Is it any wonder that you actually get less than ten minutes face time with your doctor?
I've just pulled apart one small portion of the hopelessly tangled Gordian knot of health care delivery. I'm about to show you how one doctor's visit profits everyone in the system but the two it should - you and your doctor.
I'm often asked after this point in a discussion, a couple of questions.
1.) If it's so bad for the doctors, why do they do it that way?
2.) Why does it work that way?
The answer to question number one is sort of a two part answer. The first part is that most doctors aren't even aware of the finances associated with their practice. That's why they hire a business manager. It is a very rare occasion when a doctor audits his/her books to see if there is a more efficient way of practicing the art of health care. If their practice isn't doing well enough, they just look to take on more patients - that means they work harder - not necessarily smarter. The second part of the answer to question number 1 is that since they were in medical school doctors have been taught that, "this is the way you set up your practice." They are told from early on to take as many insurance patients as possible, so that they can have as many patients as possible.
This leads us to the answer to question number 2, "Why does it work that way?" The reason it works that way is that besides the health insurance companies making money from every doctor visit that is billed through them, the AMA does as well. That's right, the same AMA that for years we trusted as our source for "good" health care information. The same AMA that we have all assumed is looking out for us and for doctors. The very same AMA who helped write the health care reform law. (As a part of their cooperation on endorsing health care reform they no doubt got concessions, only time and exposure will tell what those concessions are.) That same AMA makes money every time a claim is filed with a health insurance company. Because, here's the deal, the AMA owns the royalties to all of the billing codes - remember the billing codes? They own the royalties to those and they profit massively from those royalties. It is the same AMA that also does a lot to determine the curriculum at the medical schools. So it makes a lot of sense that the medical schools teach doctors to "bill as much insurance as you can."
You see. it really is a numbers game. The unfortunate part of that is that unless you know the rules and the numbers, and understand how to play the game - you lose… and your doctor loses… every time.
You paid a $30.00 co pay for your doctor visit. Your doctor waited 120 days and got another $50.00 for a total of $80.00. After she paid her billing and collections department to collect that amount she, made a profit of $20.00. (Yes, if you stop to figure that out, it cost her $60.00 to collect $50.00. But the billing department has to earn their keep too, I guess.)
The health insurance company, based on the number of people in your risk pool and the premiums paid by that group, collected roughly $150.00 for that visit, for which they paid out $50.00. After they pay for the claims department, overhead, and other expenses, they walk away with $10.00 profit after the $50.00 they paid out. (This is according to the new government regulations in the PPACA.) Remember though, this happens millions of times every day in America - some insurance companies pay out a million dollars in claims every single day. And by law, if they pay out $1,000,000.00, they make $200,000.00.
Also in on the scam is the AMA. They collect a royalty for the billing codes that the doctor has to use to wring money out of the tightly clenched fist of the health insurance company.
Who else profited from this deal? Well, in all likelihood, there was a prescription written, because more than half of all doctor visits end up with a prescription in the end. So the drug company made some cash as well as the pharmacy. Plus, the insurance company made about 20% on the claim they paid for the pharmacy bill. While all of this does keep a lot of people employed, I suppose, it's a HUGE waste of money!!!
This is a two part article so be watching for part two "The Solution"