The Intention of Medical InsuranceRead Time: 6 minutes
The original concept of medical insurance did not differ much from other forms of insurance. One would purchase a policy that would help cover unexpected expenses. The relationship between the patient and the healthcare provider was an entirely separate entity. Today through insurance companies are determining patient case through medical necessity denials.
How medical insurance evolved
Over time, the insurance companies developed networks and contracted with providers directly and began the process of setting reimbursement rates. This was true in the physician’s office and healthcare facilities as well. Once the insurance companies started gathering vast amounts of data on reimbursement and costs began to rise, insurance companies implemented utilization management programs to reduce their outlay. Presently, individual patients often have a dedicated case manager assigned to ensure the appropriate medical screening, vaccinations and follow-up are performed.
Virtually anyone under the age of 35 has never known life without an insurance mandated medication formulary. Insurers have contracted with large distributors, negotiated prices and incentivized providers and patients to opt for cheaper alternative drugs. Frequent changes in formularies or pharmacy distributors have often led to wholesale changes in a patient’s medication regimen. More frequent visits to the doctor and high levels of frustration have been part and parcel of this strategy.
Insurers have also employed the prior authorization technique to create barriers to obtaining care that has been ordered by a healthcare professional but is deemed too expensive or unnecessary. Many providers have added staff and spent significant amounts of time to do battle over the necessity of MRIs or medications. Endless and repetitive forms are required to obtain basic testing supplies for diabetics and have detracted enormously from the joy of practicing primary care for many providers.
To some degree, one can understand the need to avoid fraud and waste that has resulted in increased healthcare spending. In an era in which a victory is declared when the rate of healthcare spending is not quite as bad as the preceding year, everyone in healthcare must participate in the effort to reduce cost. However, what has been occurring most recently seems to cross a dangerous line. Insurance companies have now begun to dictate to hospitals how to bill for care.
Patients were required to contact the insurance company upon admission to the hospital. Presumably, to ensure that the case workers could manage the care of the patient in a facility that was contracted with the insurance company. If not, the patient could be transferred or out-of-network payment could be arranged. Quickly, this responsibility was shifted to the facility. Business office staff or hospital case managers would be required to make contact with the insurer. Insidiously, this has evolved to the point where the insurers require a review of the clinical scenario, copies of records, labs and imaging studies. The insurer will then decide if the benefits will cover the hospitalization and dictate the patient’s status. The options being the status of observation in which the overall reimbursement to the facility is much less and the patient bears a larger portion of the overall bill or inpatient which is the more traditional reimbursement.
Observation vs inpatient
Insurers are increasingly denying payment upfront or pre-payment denials if the company believes the patient was placed in the wrong category. The hospital literally gets no reimbursement in spite of providing appropriate care. To avoid this, many facilities will now simply accept the category or status that the insurer dictates. Today the situation is that the patient may present to the emergency department of a hospital, a physician decides the patient is in need of hospitalization and a hospital case manager will review the case with the insurance company. The case manager then is instructed on the status the insurance company is willing to pay and in most cases, the hospital simply complies.
Insurers dictating care
This appears to the classic tail wagging the dog scenario. Insurers are no longer providing a financial safety net to clients. Insurance companies are at every level of that patient’s care and are dictating much of the care choices either directly or by indirectly placing the provider in a maze that only leads to the decision desired by the insurer. Providers who fail to comply are faced with endless delays, tasks and denials. Although providers can typically win in the end, the insurers are counting on clinicians giving up the fight long before then. There are too few providers and too few hours in the day for most to stay engaged in the process to fruition.
In many instances, this has occurred in such a manner that it has simply become the way things are done. However, insurance companies dictating patient care is a dangerous precedent. Hospitals and healthcare providers should be pushing back. The providers who are with the patient are the ones who understand the clinical scenario best. Only the physician knows how sick the patient is and what will be required to treat the incident properly. The provider should be making decisions on issues like patient status and the facilities should be able to bill appropriately. Insurance companies that deny out of hand should be confronted through state insurance boards and not given a pass.
The clinician’s dilemma
Healthcare providers have long felt the support of patients and the population at large. Clinicians are well-meaning and have the patient’s best interest at heart, so why would the physician’s decisions not be supported? The challenge is that the general population does not understand the plight of the provider. Health insurance is a deliberately complicated system, often left vague to allow the insurers room to justify denials. Providers, both physicians and hospitals, must be willing to draw some lines in the sand and stand firm. If these practices are left unchecked the health insurance industry’s evolution will transform to the point that medicine will no longer be recognized as the medical field most providers sought to pursue.