Monday, November 28, 2011

Health Insurance Hassles

By Steve Jacob, MPH, MA, MSBA
Adjunct Professor, University of North Texas Health Science Center

Dealing with insurance companies has become such a hassle for physicians that some have given up on them.

Qliance, a Seattle-based primary care practice, has not accepted insurance reimbursement since 1997. Its 13 salaried physicians serve 4,500 patients who pay a flat monthly “subscription fee” for unlimited visits. Garrison Bliss, MD, chief medical officer, said the business model works well, because 40 to 50 percent of reimbursement to a typical primary care clinic goes toward billing and collections.

Qliance clinics have two to three times more patient visits than an average clinic but significantly lower hospitalization and emergency department visits. Dr. Garrison said the Qliance model could save the U.S. health care system $250 billion to $350 billion annually.

The complexity of the health care system places an enormous administrative burden on physician offices. For example, many economic sectors other than health care devote 100 or fewer full-time equivalent employees (FTEs) to collecting $1 billion. By comparison, the median number of physician-office FTEs needed to collect $1 billion is 770. For a 10-physician practice, those extra FTEs cost $250,000 annually.

Physicians have to hustle to cover their costs. Laurie Green, MD, a San Francisco obstetrician-gynecologist, told The Wall Street Journal, “I live my life in seven-minute intervals.” She estimated that she needed to earn $70 every 15 minutes to cover her office overhead.

The average physician spends nearly three weeks per year dealing with health plans. In addition, 23 more weeks of nursing staff and 44 more weeks of clerical staff are spent on insurance claims.

Commercial health plans are difficult to deal with, but at least they represent revenue that usually is not subject to arbitrary reduction. The average physician practice relies on Medicare for about 25 percent of its revenue. That revenue source is at risk every year because of the Sustainable Growth Rate (SGR) funding formula, established in 1997 to keep Medicare from growing faster than the overall economy. The SGR formula factors in the rising number of people on Medicare. However, the per-beneficiary costs have risen at a faster rate than the economy. When that happens, the federal government is supposed to cut payments across the board to control costs. Every year since 2002, Congress has blocked these cuts. The proposed rate cut to satisfy the SGR would have been 25 percent if Congress had not stepped in again in January 2011. The proposed rate cut will continue to rise until Congress fixes the formula. If they were to ever let the cuts go through, physicians undoubtedly would abandon Medicare in droves.

Cutting reimbursement does nothing to improve health care delivery. Physicians try to offset these cuts by working harder: seeing more patients and providing more services. However, that only goes so far. The Congressional Budget Office estimates that physicians can only make up about 25 percent of fee cuts by working harder and doing more. The patients are negatively affected as well. Physicians spend less time with them and may provide services that are not necessary.

Physicians have been gradually withdrawing from Medicare and Medicaid for years. For example, two-thirds of Texas physicians say they will accept Medicare patients, and 42 percent will accept Medicaid patients. About one in three Medicare beneficiaries say they have difficulty finding a primary care physician. As these programs inevitably are cut or fail to keep up with health care practice expenses, care for people with government insurance will devolve to the lowest-cost provider.

[1] Blanchfield BB, Heffernan JL, Osgood B, Sheehan RR, Meyer GS. Saving Billions Of Dollars — And Physicians’ Time — By Streamlining Billing Practices. Health Aff. June 2010; 29(6):1248-1254.

[1]   Casalino LP, Nicholson S,  Gans DN, Hammons T, Morra D, Karrison T, Levinson W. What Does It Cost Physician Practices To Interact With Health Insurance Plans? Health Aff. July-August 2001;28 (4):w533-w543.

[1] Congressional Budget Office. Key Issues in Analyzing Major Health Insurance Proposals. December 2008.
[1] Confused, Frustrated, and Broke. Tex Med. 2010;107(1):20-37

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