It is surprising that most employers pride themselves on shrewd vendor negotiations but when it comes to negotiating their health discounts they fail miserably. A percent discount off an incredibly inflated and constantly increasing price is not sensible
It’s time to shed the high cost of collections and “middleman” services that no longer add any value to the Patient, Provider and Employer. It’s time for self funded employers to move to a Point of Service payment system that eliminates enormous unnecessary cost and uses technology to instantly negotiate a fair price then deliver the payment in a timely manner.
Medicare Cost Pricing and Point of Service Technology– A Game Changer!
MyHealthGuide Source: Gregory J. Hummer, MD, CEO Simplicity Health Plans, 12/17/2012, www.simplicityhealthplan.com
Mr. Corte Iarossi’s article is well taken. In my opinion, using a percent of Medicare is the ONLY logical pathway for Self Funded plans.
It is surprising that most employers pride themselves on shrewd vendor negotiations but when it comes to negotiating their health discounts they fail miserably. A percent discount off an incredibly inflated and constantly increasing price is not sensible. Our government has spent millions of dollars compiling pricing and cost data by regions within states. Employers should use it to price health vendors fairly.
Corte points out many of the precautions. The Plan language is crucial and under ERISA, a plan can pay what is reasonable compared to cost especially if it does not use a PPO. It can also reserve the right to negotiate any procedure or fee. During the last three years, Simplicity Health Plans ran a self funded plan using a percent of Medicare fee schedule that in practically all cases was accepted by the provider but we also linked it with “rapid” payment within 5-7 business days.
The key to our success was using a Point of Service payment system whereby the provider simply entered their bill via a secure web site indicated on the back of the member’s card.
- The bill was instantly adjudicated to the Health Plan, clinically edited to the CMS and CPT edits and then re-priced to a percent of Medicare.
- The Provider could see instantly what they would be paid within 5-7 business days.
- The Provider was informed that the amount shown on the screen was the Plan Allowed Amount.
- The Provider was prompted to Accept the payment on behalf of the patient by clicking that they agreed to accept this amount as payment in full direct to their bank account within 5-7 business days.
- If the charge was covered by UR rules, the Provider was clearly notified on the screen that the bill would have to undergo UR and that payment might not be forthcoming within 5-7days.
- The provider could also attach any required documentation directly to the bill to help facilitate review.
- Since our plan stated clearly that benefits under the ERISA Health Plan are NOT assignable by anyone, the Provider could not claim those benefits and sue on behalf of the member for further fees.
- Since all of our members had high deductible plans, most all providers accepted the price and were paid within 5-7 business days.
Hospitals were also intrigued since rapid “fair” payment was appreciated. The system eliminated insurance forms and all member bills including all paper associated with the transaction. Hence, a complicated costly transaction was converted to a simple point of service financial transaction and eliminated ALL associated costs including eliminating the cost of a debit or credit card.
As pointed out by Steve Kelly in his response to Ken Page in the 12/10/12 response, it is inconceivable that a not-for-profit hospital system would openly flaunt a monopoly and project to the employer community, which supports those very hospitals, that they would seek reimbursement that was far above the cost of care.
I have worn two hats during my 35 year medical career as a MD and as a medical business operator both getting paid by self funded plans and pursuing fair payment on their behalf, after which, I can say with certainty that most providers just want fair payment that comes rapidly without the burdensome cost of trying to collect that payment.
A Point of Service payment system accomplishes those objectives. It aligns the interests of the Providers, Employers and Members especially in this age of high deductible plans where 80% of the time the payor of services is the Patient. In the case of a self funded covered member (now numbering 138 million Americans), the Providers, including hospitals, must realize that the “discount” that they give is now going directly to the Patient in the case of a charge below the deductible and directly to the Employer in the case where the charge is above the deductible. In these cases there is no “middleman” that is sucking money out of the system. Why wouldn’t the hospitals want to deal directly with the very employers who support their existence and pass on reasonable charges that help those employers stay in business and continue to provide insurance to their trusted employees.
We all know that something has to change. So, let’s change. It’s time to shed the high cost of collections and “middleman” services that no longer add any value to the Patient, Provider and Employer. It’s time for self funded employers to move to a Point of Service payment system that eliminates enormous unnecessary cost and uses technology to instantly negotiate a fair price then deliver the payment in a timely manner.
About the Author
Gregory James Hummer, M.D., a software engineer, was a NASA consultant at the John Glenn Research Center, trained at the Cleveland Clinic Hospital and practiced 16 years as a Trauma Surgeon. He founded IVY Medical Group/MED Center, a company that built and ran freestanding emergency/ urgent care centers and spent the last 18 years developing technologies to solve the vexing complexities, out-of-control costs, burdens and inefficiencies associated with today’s healthcare system. Dr. Hummer is Chairman and CEO of Simplicity Health Plans. Contact Dr. Hummer at firstname.lastname@example.org.
About Simplicity Health Plans
Simplicity Health Plans is a transaction integrator that creates SaaS technologies for comprehensive consumer healthcare solutions that offer an “End-to-End” cure for rising healthcare expenditures, which includes the best implementation of a CDHP/HSA. Simplicity aligns the interests of the Provider, Employer, and Employee to provide a turn-key, fully integrated Consumer Directed Health platform. Our technology portfolio includes; the Health Index Calculator™ (Health2Cash™ App); Resolutia, our Web Based medical bill price negotiator; the StayFit Plan™ wellness platform; and the first of its kind and proven CDHP/HSA Point of Service Payment System for healthcare, which fuses unparalleled technology, point of service adjudication, real-time data, and anti-fraud controls