Yesterday I argued that the fundamental point of most liberal health policy wonkery is to drive more people to coverage that pays providers closer to Medicare rates than employer sponsored insurance (ESI) rates. The Exchange subsidy design forces a convergence, Exchange risk adjustment encourages a convergence, Medicare buy-in removes a significant chunk of the non-Medicare utilization and moves those services (and people) from ESI based rates to Medicare based rates. The Public Option in any and all of its variants is premised on paying providers Medicare plus a little bit in order to create a low cost broad network product.
However even in a universe where there is a convergence of private, public and qasui-public/private health insurance where the vast majority of the services are paid for at or near Medicare rates, there is still a lot of space for private insurers to operate in.
@jrovner @DemFromCT @emma_sandoe B) forces competition and convergence to Medicare + a little pricing BUT big space for private carriers
— Richard Mayhew (@bjdickmayhew) July 12, 2016
The biggest reason for this space to still be open to private insurers is provider practice profiles.
And before we go there, I want to divert for a moment.
Monday night I was taking out the trash. As I was walking down the alley, I saw two fluffy rabbits doing their best to look like rocks as there was a red tail hawk circling overhead. With a garbage bag in one hand, I tried to creep past them without making any noise. One step, two steps and then my right ankle turned in on itself and I am flying in the air. I hear a pop and feel things move like my ankle was on a major slip fault line and as I am twisting in mid air so that I can not land on the garbage bag, I think to myself if I would prefer a break or sprain. Since the college season is starting soon, I would prefer a sprain as I can grit my teeth and hobble through a season with a few turnbacks and competition downgrades. From November through June I would have preferred a break as those things actually heal. I landed, gingerly put weight on my right foot and it is a painful Grade 1 sprain.
Unfortunately I know what to do with a sprain so I am on a good RICE regime right now with the hope that I can start running again next week.
However if I did not know what I did to my ankle or if it needed more treatment I would go to either Dr. Smith or Dr. Jones.
Let’s imagine that they are both in the Medicare +10% Public Option. Would both of them be in the Mayhew Narrow product that is priced at Medicare +10% as well?
Maybe, maybe not.
Let’s explore why below the fold:
The key determinant of whether or not a provider who is willing to take a given rate is included in a narrow network is their pattern and practice of care.
Dr. Smith and Dr. Jones both have good patient outcome measures, they both are board certified and stay active in their professional development. As far as we can tell from claims data, both docs are in the top decile of outcomes for our members in the broad commercial network.
I saw Dr. Smith for an ankle problem about a decade ago. His first reaction was to order an MRI and he was leaning surgery. He was privileged at a regional academic medical center and liked to slice and dice and turn ankles into Julienne fries there. Since I had to pay $300 out of pocket for the MRI and would be on the hook three weeks of pay for the surgery, I wanted a second opinion.
And that is when I saw Dr. Jones. She was a former soccer player so we talked about the way referees view the game versus players. As we were talking she was twisting and turning and poking my ankle. She ordered an X-ray. At the end of the appointment her prognosis was that physical therapy, electro-stim and rest would most likely get me back on the field in six weeks. Total out of pocket cost for me would be $300. Total health insurance costs with the PT would be under $1,500. She said that if I did not show improvement in six weeks, surgery might be an option. She had privileges at the regional academic medical center as well as a community hospital. Since the surgery if needed would be a straight forward operation, she was more than happy to do it at the community hospital.
Thankfully I responded well to the physical therapy and within five weeks I had been released to referee competitive games again.
Both Dr. Smith and Dr. Jones were under contract for the same Medicare + X rate. However Dr. Smith consistently is one of the top billers on a risk adjusted basis. Dr. Jones is consistently an average biller on a risk adjusted basis. The difference is not the rate of pay, it is the number and types of services that the provider orders and where those services are performed. Dr. Smith aggressively orders everything and most of those services are done at the local academic medical center. There the Medicare base is much higher than the Medicare payment base at a non-hospital facility. He is also willing to go to surgery as an early option. He is technically very skilled (if I had my foot smashed by a motorcycle, he is one of the three docs within 100 miles that I want working on me) but everything he does is expensive. Dr. Jones orders fewer tests, and performs fewer surgeries. Those services are more likely to happen either at outpatient centers or community hospitals. Again, she is very skilled (if I have a three knee ligament explosion, she is a top choice to fix me) .
In a world where there is a public option priced at Medicare +10%, both Dr. Smith and Dr. Jones would be in that option. However Dr. Jones would be in the competing Mayhew Super Duper Narrow product. We might even pay her Medicare +25% because we would make up the savings on lower utilization and her particular pattern of care. We could offer a network that pays certain providers Medicare +25% and price that network cheaper than the public option that probably would be built on the any willing provider model because we could exploit lower cost patterns of care.
One thing about all of this is that you won’t know how Dr. Jones or Dr. Smith, er, operate, until after they have several years worth of patients behind them. I don’t know how that affects Mayhew Insurance’s judgement.
This is also an example of what a fallacy it is to think that patients have the information they need to be good “consumers”. That the MRI and Dr. Smith will cost me a ton more (and put me through possibly unnecessary surgery!) is something I wouldn’t have any way to know unless I have the time, money, and spideysense to seek a second opinion. If there were some way for me as a patient to evaluate doctors and specialists before I schedule the appointment, I would be able to make an informed choice to see Dr. Jones.
I saw an orthopaedic surgeon at a university hospital earlier this year who was all gung-ho to amputate my gouty left pinky — to the wrist, even. (She said that what remained of my good hand would look prettier that way.) She wanted to do an MRI first, but agreed to do a biopsy (much cheaper) when I suggested that. When the biopsy result confirmed gout, they referred me to the hospital’s rheumatology clinic, where I was prescribed allopurinol and there has been no talk of amputation.
I guess some doctors are biased toward doing certain doctor things that are cool, or profitable, or consistent with how they were taught to do things.
@craigie: Yep, there is a bit of a lag to determine whether or not someone is a higher biller or an average biller for bundled care. That is why everyone goes into either the Medicare Advantage or the broad commercial network to build that type of history up
@MomSense: I went in to have my hernia evaluated Monday. For some reason they do split appointments and even have a form indicating you have to come in twice on the same day. I dutifully went for the first one and, after the blood pressure test nurse did her thing, a guy came in with a nurse and proceeded to talk to me and do an exam. He recommended that get the fixed so I said to him “I hate to ask this but are you the doctor”!! He laughed and said, ” yes, I had a change in my schedule and I was able to see you!” It was actually pretty funny.
@Amir Khalid: A surgeon will most often advise surgery.
I would never see one for a headache. He’d want to amputate my head.
(and although this would significantly improve my looks, it would interfere with my ability to operate a motor vehicle)
@Amir Khalid: Hello Mr Nail!
@germy: That was my problem. I was diagnosed over a year ago and I have no symptoms. I did my share of research, both on medical sites and here at BJ, and the conventional wisdom was to get them fixed. I’d hoped he would say, “awww, you’ll do ok without it” but he didn’t.
My dad avoided having them fixed for years because he wasn’t experiencing symptoms. It wasn’t a smart choice. Glad you are getting them fixed and I hope it goes smoothly.
I don’t think the medical community fully appreciate how difficult it can be for some of us to go to multiple appointments at different locations. It’s more than just the scheduling. It’s transportation, missed work, expense, child care, etc.
@raven: Researching medical stuff online has always been difficult for me. And almost impossible during a medical emergency.
There’s so much bullshit online to wade through; so many links to “for profit” places selling their own dubious cures, so much conflicting and bad information, so much dishonest marketing.
Let us know how everything goes for you. I’m glad you’re getting it checked.
@MomSense: “some” are not thrilled I am waiting until January!
@MomSense: Exactly. Also, calling a dr.’s office, dealing with the front desk staff, and then finally hearing “The next available appointment is two months from now…”
@germy: Last year I almost cut my finger off when I fell on a plate taking chicken to the grill. I was alone on Sunday afternoon so I put a compress on it and tried to find an urgent care joint online. After I kept find places that were closed I decided I should just go over to the ER at the hospital that is a block away. Things turned out ok but it cost me much more for that damn ER copay!
@MomSense: That was the strange thing about this, it was a split appointment at the same place. They actually had a form for it so I know it was not just for me.
This is a good real-world explanation of what’s going on. And most people don’t know enough to get — or parse — the second opinion.
This is where a good PCP or PCP practice would do wonders; ours is affiliated with the local academic hospital (all 3 of our PCPs are listed as Harvard clinical instructors) and they have always referred us to other clinical instructors. My husband got referred for surgery only after non-surgical therapy failed.
So, insurance-wise, a good medical skill to have is actuarial science.
Nice essay. I’m an ICU doc, a place where we practice very expensive medicine. Physician culture is extremely important in determining practice patterns. I’m salaried, so what I order has no effect at all on my income. But the downstream effect on a patient’s bill of what I do is immense — the tests I order, the treatments I do. Atul Gawande’s 2009 article in The New Yorker about regional differences in medical costs is still worth reading; he documents a couple of glaring examples of this by comparing two different towns. The Dartmouth Atlas of Health Care has also studied this phenomenon for years. Certainly a few doctors do too much in order to make more money. But mostly it’s the culture of where we trained and where we practiced. That should be able to be modified.
My FIL developed “colonized” MRSA after a hospital stay or two. He had a trach tube and one time when he was hospitalized and being suctioned I noticed the tech put his gloves on and get the sterile suction thing together, but then he decided he needed to adjust the regulator so he used his sterile hand to do it. There were at least 3 other medical nurses/technicians in the room at the time, and nobody said anything…
I’m sure that happens all the time.
Surgery should almost always be the last choice if some other reasonable option is available, IMHO. There’s too much risk of infection for even the simplest surgery due to seemingly innocuous mistakes that even highly trained people make.
Good luck with your ankle!
@JimL: Or, alternatively, a good medical skill is to use less extreme interventions before going to major ones.
A few years back I went for a checkup. The nurse came in to take blood. You know how they use their two fingers to feel around for a vein? She’d do that, then cough into her hand, then feel around some more, then cough into that same hand some more, then feel around again. I’m sitting there thinking “am I on candid camera?” (also, I didn’t see any alcohol for sterilizing the part where they stick the needle.
Finally, I told her politely that I didn’t feel comfortable with her coughing on her hand, and then puncturing my skin into a vein. She said “I’m not sick! It’s just allergies, the dry air!” She prodded me some more (with the same fingers she’d coughed into, and then abruptly got up and left the room.
A few moments later a different nurse came in and drew the blood (again I noticed no alcohol swab)
A few months later I was in their waiting room and the coughing nurse saw me and gave me a dirty look.
I never returned.
I used to work with a guy who died from an infection after a simple hip replacement. And I had a neighbor who went in for heart surgery, got a staph infection on the operating table. They had to remove one lung and part of his rib cage.
@germy: What a horrorshow. :-(
My doc is a big fan of lots of blood tests every year (I’ve got borderline-high cholesterol with high “sticky small particles” counts and the like). He sends me to a place that their exclusive business is taking and analyzing blood, urine, etc. The staff there are very good because it’s all they do all day.
It’s a crime that people don’t take the risks of infection seriously. As you indicate, it’s a deadly problem.
@I’mNotSureWhoIWantToBeYet: A few years ago my doc ordered some blood work. I went to one of those businesses that specialize in taking blood. I must have picked the wrong one. A man and a woman behind the counter. The woman seemed to have a cold (sneezing). I quietly prayed I wouldn’t get her. I was glad when the guy called me. He drew the blood, but didn’t press on my arm afterward (or tell me to press on it)
For two weeks I had a large, discolored “black & blue” mark on the inside of my arm. The vein had bled inside my arm.
I’m developing a phobia of the medical profession…
I am sorry to hear of your ankle sprain, but appreciate that you took such care to help local rabbits survive.
@Chris Johnson: Actually, Atul Gawande’s “Being Mortal” also has a nice dissection of differences between doctor recommendations when he talks about his father’s cancer, and why he decides to go with the surgeon who offers a less-radical approach – watch and wait to do surgery until the cancer is seriously interfering with his quality of life – as opposed to the other surgeon who wants to do surgery right away.
I have to remind Docs that I am allergic to aspirin on a regular basis. Been that way for years. They’re always trying to give me anti-inflammatories which will cross react. Since I got put on blood thinners, I have also had to remind Docs on a couple occasions that “No, cutting on me today is not a good idea.” It comes with the territory.
I don’t blame them (much***). Most of them are overworked and have 3 patients problems running thru their brains at once. I only have one patient’s problems to deal with. So I slow them down and ask questions.
*** when it comes to the aspirin tho… Back when they still used paper there was a big red block across the top if one had medical allergies. I assume (hope???) the same is true of their laptop screens.
What’s the difference between price and price point?
pseudonymous in nc
@raven: ‘Price point’ used accurately means that the price determines the goods or service, not the other way around, like how the Nissan Versa is built specifically to be the cheapest new car on the US market.
On thread, the lack of a truly empowered PCP sector matters here, and that’s a bootstrapping problem: eventually the US might get to a point where middle-class Americans are not going to a family doctor simply to get a referral to an Extra-Specialist (because middle-class Americans all think themselves Extra Special) but to get a decent assessment of things that may require specialist treatment but there are different treatment options.
@pseudonymous in nc: Ah, thanks!
@raven: the way I am using it is price point is the Medicare + X
Price is what is on a bill. So an MRI at big city hospital at 115% Medicare might have a price of $905 while the same MRI at the strip mall clinic might be priced (115% Medicare still) $432.