By George W. Chapman
Is it by definition a “system” or is it really a hodgepodge?
The definition of a “system” is a set of things working together as parts of a mechanism or an interconnecting network. It is a set of principles or procedures according to which something is done. It is an organized framework or method. The U.S. healthcare is hardly a cohesive system
The U.S. healthcare is better described as a hodgepodge (mess?). Instead of a singular system we have several unintegrated independent factions: Medicare, Medicaid, dozens of Medicare Advantage plans, the exchange, workers compensation disability and plain uninsured. Providers can choose to participate in some of the above or even none not at all. Most consumers and many providers are confused and frustrated (angry) with the U.S. hodgepodge.
We are the only economically developed country without a healthcare system. And while no system is perfect, at least everyone understands how it works. The U.S. is the only economically developed country without a universal system. Canada, United Kingdom. Australia, Norway, Sweden, New Zealand (since 1912), France and Italy have healthcare systems. All but 43 of 195 countries in the world provide universal coverage for at least 90% of their citizens. The best healthcare in order are: Luxembourg, Singapore, Switzerland, Japan, Netherlands, Sweden, Hong Kong, Australia, Israel, Germany. We don’t have to reinvent the wheel. Politics and special interest groups keep us from giving universal healthcare a serious look. We spend far more per capita than any country in the world.
DOGE Will Audit CMS
The newly formed Department of Government Efficiency (DOGE) will serve as an advisory group to Congress. Healthcare is 28% of the federal budget, it includes Medicare, Medicaid, CDC and NIH. Physician, hospital, and nursing home reimbursements are already controlled by Congress. There is no “fat” to be trimmed there. Physicians have not had an inflation adjusted increase in 20-plus years. Hospitals and nursing homes operate below or slightly above breakeven. The DOJ has been successful at finding and prosecuting fraud. Since 1950, all cancer rates have dropped thanks to the diligent work of the NIH and CDC. If the DOGE wants to have an easy, immediate and consequential impact on healthcare costs, just focus on what the U.S. pays for drugs. Since we don’t have a healthcare “system” and are at the mercy of the drug lobby, the U.S. pays retail-plus for drugs while the countries with universal care negotiate all drug prices and pay less than wholesale. Any attempt by the DODGE to cut reimbursement to providers or benefits for seniors will devastate our already troubled hodgepodge. Any recommendations from DOGE, if enacted by Congress, will eventually impact all of us covered by any insurance as commercial carriers tend to mimic Medicare reimbursement to providers and benefits covered.
Covering Obesity Drugs
Several commercial carriers may increase their coverage of GLP-1 (obesity) drugs. There is now a proposed rule to cover these drugs for Medicare and Medicaid recipients. The proposed rule would have to be finalized by the new administration. Currently, 3.4 million seniors have Part D coverage. The cost to cover obesity drugs would be about $2.5 billion (non-negotiated price). CMS projects no short-term impact on Part D premiums. The Inflation Reduction Act caps out-of-pocket expenses for seniors to $2,000 annually effective Jan. 1. CMS anticipates that the increased cost of GLP-drugs will be more than offset by the reduced cost associated with heart disease, diabetes, strokes and knee and hip replacements.
Remote Patient Monitoring
Hospitals perform complicated procedures and save lives. But no one wants to be in one day more than necessary. Remote patient monitoring at home is being field tested and the results are encouraging. RPM reduces inpatient stays, readmissions and can prevent some inpatient stays altogether. This is a boon for inpatients and understaffed hospitals. The cost savings will be significant. Field testing includes video-based telehealth, device-intensive RPM and structured acute care at home initiatives. Field testing is promising and procedures are still being tweaked but we can expect RPM to be more utilized in the coming year.
Artificial Intelligence
Almost three of four organization (health systems, insurers, government agencies) intend to increase their investment in AI according to a survey conducted by Define Ventures. Established governance structures will align AI incentives with corporate values, identify and prioritize use, ethics safety and date policies. AI advocates believe it will reduce costs, improve quality, increase access and free up providers from the mundane aspects of healthcare delivery.
Claim Denials
There is a wide disparity among insurers when it comes to denying claims. Again, a reflection of our healthcare non-system. The denial rate by an insurer should be considered by employers when selecting a plan for their employees, by individuals selecting a plan on the exchange or by seniors selecting an Advantage plan. Denial rates for Traditional Medicare, according to Forbes and other sources are: Kaiser Permanente, 7%; Oscar Health, 12%; Ambetter, 14%; industry average, 16%. Denial rates for Medicare Advantage: BCBS, 17%; Cigna, 18%; Molina, 18%; Aetna, 20%; Anthem, 23%; United Healthcare, 32%. On average, Medicare Advantage plans overturn 80% of their own denials if, and that’s a big if, the denial is appealed. But only 4% of denials are ever appealed. Consequently, CMS will require Medicare Advantage plans to be far more transparent about the appeal process. You are more apt to reverse a denial if your provider is actively advocating.
George W. Chapman is a healthcare business consultant who works exclusively with physicians, hospitals and healthcare organizations. He operates GW Chapman Consulting based in Syracuse.