Healthcare paperwork is a $430 billion annual burden that hampers efficiency, wastes resources, and reduces the quality of patient care. 8 to 12% of healthcare spending in the US is wasted by excessive paperwork which steals physicians’ time, and delays treating patients.
A MEDICAL CLAIMS SWAMP
Setting prices, authorizing procedures, and collecting payments is called Revenue Cycle Management. RCM involves many people, steps, and systems which are susceptible to human error, leading to costly remediation and delays. [https://www.caremoat.com/billing-rcm]
The industry processes about 4 trillion claims each year - 12.9 claims per person. 10 to 20% of these claims go to a complex and costly denial adjudication process. Rejected claims can result in revenue loss for the provider, and surprise out-of-pocket expenses for the patient.
3 industry changes that would significantly improve the situation.
PROPOSAL #1 -PAY FOR A CAR NOT A LIST OF PARTS
A medical claim consists of a list of line items defined by the ICD coding system with 150,000 clinical codes and the CPT coding system which has 10,000 procedural codes.
Compare this to a car manufacturer which chooses parts and designs for a handful of models and presents simple product propositions and pricing to the consumer. The consumer can choose a car with features and a sticker price resulting in a competitive market with minimal paperwork.
Oklahoma Surgery Center has pioneered a simple one price all-inclusive fee structure which is an example for the industry to follow. [https://surgerycenterok.com]
PRPOSAL #2 – SIMPLE STANDARD HEALTH PLANS
Each year 4 million employers redesign their complex health plans. Many employers offer 3 or more unique health plans which employees do not understand. Also, Medicare and government plans have too many complex plan designs which change annually.
200,000 provider organizations renegotiate pricing and terms annually with each health plan they work with.
We need a small number of standardized national health plans with a limited set of options which meet consumer focused standards of care.
The ACA already has well-defined health plan tiers [bronze, silver, gold, and platinum] making plans understandable for consumers, allowing competition between commercial providers, and reducing the complexity of claims administration.
PROPOSAL #3 - ELIMINATE INCENTIVES FOR ANNUAL HEALTH PLAN CHURN
Private health insurers use a costly direct sales business model with thousands of commissioned agents. Insurers pay a large commission in the first year of signing a client company. The commission decreases to a small percentage in year 4. This incentivizes agents to recommend changing insurers. Employers change insurers every three years on average.
We need incentive systems encouraging long term relationships between employers, insurers and government funders that focus on consumers and continuous improvements for all parties.