Medical Insurance VS Confrontational Medicine

Since the 1970’s the health insurance industry has undergone fundamental changes. Transitioning from indemnity plans to Major Medical plans in the late 70’s was a milestone.  Initially, carriers kept the indemnity platform in place but added a major medical umbrella at a very low premium. And, the major medical policy was a $250,000 umbrella priced at less than $3 pepm.

Even with major medical in place, insureds were responsible with dealing with their providers on balance billing issues. This was not a problem at the time because balance billing was extremely rare, however when it did occur it was the provider who was viewed as the “bad guy” not the insurance company. The consumer effectively had “veto power” with skin in the game.

We used to call this Medical Insurance. But times have changed.

With the advent of PPO’s and HMO’s (Managed Care), the relationship between patients and their providers fundamentally changed. Secret and proprietary contracts inserted between providers and Managed Care Organizations became the norm whereas before such contracts did not exist. Patients became third party beneficiaries of contracts to which they were not a direct party  and they unknowingly lost control of their health care costs. They lost their veto power without knowing or caring why. Lemmings we all became – God Save The King!  ( Managed Care Under Siege )

Whereas we used to call this Medical Insurance, we now call it Managed Care, or PPO plans, or HMO plans. But times are changing again.

Employers are moving away from Managed Care as evidenced by the Cost Plus revolution (www.costplusinsurance.com ) in Texas (now spreading to other states).  They have become aware that managed care contracts do not save money at all; the opposite is true. Managed care contracts guarantee ever increasing health care costs through escalator clauses and outlier provisions (which effectively eviserates so called discounts). See – Health Care Strategies for Texas Political Subdivisions

Going back to the old indemnity plans, employers are beginning to pay claims using Medicare pricing as a benchmark.

Some providers are fighting back, attacking the patient through balance billing skirmishes intended to put pressure on Plan Sponsors to “cave in” to the financial demands of medical providers, especially hospitals.  But savvy Plan Sponsors are standing their ground and winning.

Inserting an attorney between a medical provider and an insured on balance billing issues is effective. It is much like inserting a PPO contract between a provider and a payor, the former to the advantage of the consumer. For the first time ever, consumers are represented by the payer who adopts this approach.

Some Plan Sponsors, in lieu of  placing an attorney between the provider and consumer, and are simply positioned to negotiate each and every claim as they arise.  Providers, especially hospitals, realize that most consumers do not have the financial resources to pay enormous, inflated, arbitrary medical bills and know that ultimately they will fail in getting accounts receivable down to a lower level on such accounts. Dangling “easy”  money at  hospital CFO’s to “make this claim go away” is really effective, and much less expensive than paying claims under PPO contract agreements. “Mr CFO, you are chasing $50,000 in balance billing from Joe Sixpack. We will pay you another $10,000 if you agree to stop hasseling Joe and his family, and agree to accept this as final settlement of this outrageous, inflated bill that is equivalent to 1,200% of Medicare or 2,000% above your cost as you have reported to CMS.” A five minute phone call usually resolves these issues.

Whereas in the 1970’s we called this Medical Insurance, we now call it Confrontational Medicine.

Editor’s Note:  Credit is given to Jeff Seiler, renowned insurance consultant from the Chicago area for coining the term “Confrontational Medicine.” His website is www.ssbenefits.net

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