Stanley Feld M.D.,FACP,MACP

The government could solve the uninsured problem with a few effective consumer driven incentives. Previously, I have made the point that all of the incentives need to be initiated at the same time. They have to be made simple and clear without loopholes.

Mitt Romney plan in Massachusetts and Arnold Schwarzenegger’s in California plans fall short. They promote universal coverage in a market environment. Universal Health coverage is important but should be optional to the consumer. Both plans are complex. Both plans have several problems in common. Both are contaminated by politics and facilitator stakeholders’ vested interests. The more complex a system is, the more opportunity for abuse by savvy facilitator stakeholders. Neither plan creates a true market economy. If the plans were attached to the ideal medical savings account plus tax equalization for a group and an individual, along with true price transparency, they would have a chance to be effective. The plans would create a pure consumer driven healthcare environment. The consumers would own their healthcare dollar and force competition. In the plans proposed the consumer does not have any increased power.

Hillary Clinton’s program is not the answer. It is designed to fail. When it fails the Democrats will call for a government controlled single party payer in a price controlled environment. This will create a larger mess than we have now. Her plan will also create another unaffordable entitlement. Our government cannot afford another entitlement program.

We have seen in an effort to control prices (price controls) the government has made irrational decisions. One such decision severely decreases the reimbursement for DEXA (bone density) to the point of discouraging medical practices from developing disease management programs for this chronic disease (Osteoporosis). The result will be to undermine the ultimate goal of creating a focused factories for the treatment of osteoporosis. These focused factories would increase the quality of care delivered for osteoporosis and avoid the complications of this chronic disease.

It is much better to create an environment which lets the patients determine the efficacy of a treatment if they are given the appropriate information to decide on the purchase of a medical therapy.

It is my opinion that community rated healthcare premiums should be included among the changes I have outlined to repair the healthcare system. Everyone in a city or region should have his premium rated by the health experience in his community. The premium cost is based on the $6,000 deductible. The $6,000 premium will obviously be lower than the first dollar premium coverage.

The argument against community rating among many healthcare policy wonks is that young people are subsidizing the sicker citizens. Therefore the healthy people will be unwilling to pay the premium and will not participate in a community rated system. I believe this is a porous argument if we look at what is happening today with corporations that are self-insured.

We need to look at some of the principles of pricing life insurance and auto insurance. People at risk pay a higher premium than people with little risk for death or auto accident . This principle should be applied to healthcare insurance in the ideal medical savings account model. We need to convert the healthcare insurance model to a true insurance model.

In reality, community rating is the way large corporations are charged by healthcare insurance companies to administer their self insurance plans. The corporations are charged according to the healthcare insurance experience. If the healthcare experience was $1 million dollars last year the corporation deposits $1,100,000 in a healthcare trust fund the following year. If the employees spend more than $1,100,000 during that year, the corporation either adjudicates the trust fund for the insurance carrier’s administration at the end of the year or that difference is added to the next year’s trust fund payment. General Motors was self insured. It was screaming about their healthcare cost. With their new contract they have now dumped the insurance relationship off to the automotive unions. This move is not that bad for either side. It gets ownership of the healthcare dollar closer to consumers, the autoworkers. However it is less than perfect.

Human Resource officers are experiencing how their self insurance trust is priced by the third party administrator, the healthcare insurance company, and are unhappy. They are realizing the healthier their company is the lower the premium cost will be. They are beginning to set up contests among employees to lose weight, control their blood sugar if they are diabetic, and control their blood pressure if they are hypertensive, to avoid the complications of those diseases.
The reality is that large and small businesses’ healthcare insurance premiums are determined by that businesses community healthcare experience. Large and small businesses try to get rid of their sick people. However, there is great liability to this maneuver. I sense most corporations have walked away from trying to fire these people.

The issue of healthcare insurance has not been the concern of young healthy people when the corporations were paying for their healthcare insurance. Healthcare insurance coverage has become expensive. The argument is more young healthy people will elect to be uninsured if they were required to buy their own healthcare coverage. However, more and more employers are limiting benefits. Many young people are finding out that they have inadequate insurance if they get sick. Additionally, many employers are dropping their healthcare insurance coverage for all employees.

If we think it out in the ideal medical savings account, the corporation provides $12,000 to the employee. $6.000 is put in the medical saving account and the next six thousand pays for first dollar coverage above $6,000. If the employee does not spend the $6,000 that employee keeps that money in a trust fund for his retirement. The young employee would actually have incentive to purchase healthcare insurance and try to protect the health of his family.

If the healthcare system converted the present corporate community rating formula to a city wide or regional community rating system the risk would be spread to the entire area covered. It could result in a lower premium cost. If the individual communities or regions encouraged the creation of systems to encourage good health, community pressure would be put on the citizens to lose weight, control blood sugar and blood pressure similar to procedures currently being used by corporations. The communities would be encouraged to decrease local environmental hazards including restaurants, in order, to decrease the community healthcare costs and risks.

Local regions could encourage our restaurants not to serve 3,500 calorie meals. We have to support the efforts of TGI Friday. We need to have community pressure on us because we are responsible for our healthcare dollar and indirectly responsible for our community’s healthcare dollar.

Everyone should have the ability to buy a community rated ideal medical savings account with pre tax dollars. They should also have the right to buy any other healthcare insurance policy with pre tax dollars. This policy would increase competition among healthcare insurance policies even more. Some might have noticed that this quarter UnitedHealthcare’s profit went from very grotesque to extremely grotesque. It increased 15% taking advantage of their control of the healthcare premium and provider payments while increasing premiums for the employer.

If someone chooses to be uninsured he would have to negotiate the payment on his own and not enjoy the tax benefits of the ideal medical savings account. At the same time the government through regulation, would require the healthcare insurance industry, hospitals and physicians to have complete and accurate price transparency based on cost. If the facilitator stakeholders did not participate they would lose the privilege of insuring and serving the public in that state. If the government supplemented the insurance premium of people who could not afford the ideal medical saving account healthcare insurance policy the government would save money and enable the patient to have incentive to control their healthcare costs. It would inspire a new paradigm of competitive healthcare insurance and medical care. The consumer would control his healthcare dollar, have incentive to control his healthcare spending and demand a competitive environment necessary for a true market economy.

Stanley Feld M.D.,FACP,MACE

Another example of the government trying to improve the healthcare system is Medicare Part D. The Medicare Part D benefit was created to help senior citizens pay for their medication90% of the Medicare healthcare dollar is spent on the complications of chronic diseases.

The goal was to enable the senior patients to buy their necessary medication at affordable prices. If a person has an illness that needs medication that person has to be able to afford the medication. Taking the medication is important to prevent the complications of chronic diseases. It is well established that

I believe the government’s intentions were good. However, after vested interests manipulated the rules and regulations, Medicare Part D has turned out to be less effective and more costly than anticipated.

Medicare Part D was created to enable free market competition to regulate the pharmaceutical sector of the healthcare system. The government could have opted for a single party payer system for drugs for Medicare recipients. The structure of Medicare Part D created opportunities for innovations and entrepreneurship on the part of the healthcare insurance companies and large pharmacy chains. They could have been creative and proven that a free market economy works to the advantage of all. However, they have figured out how to manipulate the system to their advantage and the disadvantage of the consumer.

The government program created specific pricing rules. These companies figured out how to get around the pricing rules. The government has recognized the defects. Yet it has been slow to act to repair them. Slow reparative action is not unusual in a hierarchical bureaucracy.

In the most affordable Medicare Part D policy the premium is Humana basic costing $24 per month. It started at $14 per month. The premium provides coverage until patients reach $2510 in drug costs. After $2510 the patient pays 100% of the drug cost until the drug cost reaches $4050. Thereafter patients pay 5% of the drug costs. The co pays varies depending on the drug and the healthcare carrier. At Humana, generic drugs co pay is $4, branded drugs $25, and non healthcare insurance company’s preferred drugs have a co pay of $54.

The $87 Humana Medicare Part D per month plan only improves the generic drug payments.

The $2510 doughnut hole (coverage gap) had been inserted after much lobbying by the healthcare insurance carriers. This is a loophole. It created a great disadvantage for the patient. The doughnut hole (coverage gap) is to the advantage of the healthcare insurance companies.

Humana had a “My Annual Cost Calculator” posted on their web site at one time. From that calculator you could figure out how much they charged your account for each drug. When I used the calculator it looked as if they were charging the patient’s account the retail price for the generic and brand name drugs. You can be certain that Humana was not paying the pharmacy the retail price. This served to get the patient into the doughnut rapidly. At that point patients pay 100% of the price for the medication. The details of the program are complicated and aggravating.

When faced with a complicated issue the consumer would look for help from a consumer advocate. AARP would be the natural consumer advocate for senior citizens. Mr. Richard Jellicoe’s comment about AARP suggested that AARP was not as dedicated a consumer advocate as we thought. “What amazes me is that AARP endorsed this company when it was time for 2007 Medicare sign up and it was not till many months later that AARP acknowledged that it’s endorsement of UnitedHealth care was a paid endorsement. They offer drugs with co-pay almost twice what you can get the same drug via cash. I guess that is how they can pay it’s fired CEO $5 million in retirement. And AARP is supposed to help the seniors.”

Dennis Kucinich said. “According to published reports, the American Association of Retired Persons (AARP) “will net AARP $4.4 billion over seven years from the insurance giants United Healthcare and Aetna” with whom the organization signed agreements earlier this year. Under the AARP brand name, the organization will promote Aetna insurance policies to its members between the ages of 50 and 64 and United Healthcare policies for Medicare-eligible members”.

Kucinich emphasized that he was not taking issue with the 38 million members of AARP. “Millions of trusting AARP members has bought Medicare-supplemental and prescription drug insurance plans from AARP, believing that they were getting a good deal. The ‘AARP name’ was like the ‘Good Housekeeping Seal of Approval.’ It turns out, however, that AARP is taking a $4 billion cut by steering its members to profiteering private insurance companies trying to capitalize on fear and confusion.”

Wal-Mart four dollar pricing of generic drugs promises to put a big hole in the Medicare Part D shame. Physician will be more than willing to co-operate if the generic substitute is equally effective as a brand drug.

If the Medicare Part D healthcare insurance policy was driven by the patients’ vested interest and not the secondary stakeholders’ vested interest, Medicare Part D would be a great thing. It would go a long way to help repair the healthcare system. It would serve to decrease the money spent on the complications of chronic disease. (Medicare part A and Medicare Part B). I would say the healthcare insurance industry was entrepreneurial in its influence over the construction of Medicare Part D. I suspect that both the administration and much of congress had difficulty understanding the complexity and possible defects in the plan. Now the key is to force the administration and congress to fix Medicare Part D.

Stanley Feld M.D.,FACP,MACE

There are oceans of information and data describing our options in the healthcare system. Neither the consumer nor agents for the consumer (typically Human Resource officers) have had an easy time distinguishing between good and bad information. Health insurance companies have large departments that “craft” its message to the media and for the sale of its healthcare insurance products. The goal is to increase the number of healthcare insurance policies it sells. They also have entire departments that negotiate them through the maze of rules and regulations. They also have multiple prices for multiple customers. All of the above increase the healthcare insurances companies’ inefficiency and overhead leading to an increase in premium pricing. All of these actions are entrepreneurial.

There are many rules and regulations imposed by government bureaucracy that distracts physicians from their duty of delivering medical care. The easiest thing for physicians to do is do their job the best they can. Physicians cannot fix our broken healthcare system. Our medical care system is not broken. It is inefficient in delivering care for chronic diseases. Physicians can and do deliver excellent medical care. We lack systems and motivation to deliver excellent preventative care. Preventative care goes beyond the annual physical examination. It is essential that the healthcare system create incentives to develop systems to deliver continuing care for chronic disease. This includes the patient being activity responsible for the self management of his chronic disease. This concept can be understood by reviewing the AACE’s “Management of Diabetes Mellitus A System of Intensive Self Management .”

Organized medicine has been dormant and ineffective in creating innovative ideas in order to teach physicians how to develop systems of care for chronic diseases. The government and insurance industry have been uninterested in supporting the development of these systems of care because I believe they do not have an understanding of its importance to the long term cost of healthcare. The attitude prevails despite the fact that we know that ninety percent of the healthcare system’s cost are spent on the complications of chronic diseases. If you are a company interested only in short term results, I can understand the attitude toward long term reduction of chronic disease complications. It would be an entrepreneurial activity to develop systems of care for chronic diseases that would teach physicians how to care for chronic disease. Additionally the incentives to execute that care would have to be provided.
.
The healthcare system as opposed to the medical care systemis extremely complex. The multiple small “political steps” taken over time to help repair the healthcare system have not generated effective change. As Nietzsche said, “sometimes small steps make the situation worse’.

It seems that everything that is done to improve the healthcare system ends up harming it even more. A recent example is the windfall profits provided by a defective DRG payment system for hospital systems. It took a couple of years for the hospital systems to figure at the loopholes in the DRG system. Once they did, hospitals’ profits soared. This was entrepreneurial on the part of the hospital systems.

CMS recognizes the defect and wants to implement a new DRG system based on hospital system costs rather than hospital system charges. This change implies true price transparency. Price transparency should be available to the consumer to choose the hospital. Price transparency should not be developed into a form of fovernment price controls. If a hospital experiences more overhead or delivery costs they should charge more. However, if they were forced by competition to become more efficient they would be able to reduce their prices. The result would be a decrease in cost. Hospital systems should make the cost of a band aid clear. It is simply wrong to charge $11 for a five cent item. However, hospital systems’ lobbyists successfully fought for a one year delay in the implementation of a new DRG payment formula based on cost and not charges.

I suspect Dr. Mark McCellan resigned as director of CMS out of political frustration. He was not interested in price controls. He was interested in accurate pricing. It is one thing for the government to know what to do. It is another thing to get it through the tangled way our government bureaucracy does business. To me, the only way to reduce the obscene hospital fees is by knowing the hospital costs for the service or item and not accepting the grossly inflated price and then negotiating a discounted price.

Hospitals should be paid on a cost plus basis in relationship to the average hospital cost per disease in the state or county. Allowances should be made for variation in overhead in different parts of the country. This methodology would force the hospital systems to become more efficient and be competitive. They would be forced to learn how to increase their profit margin as prices would decrease.

The present payment system encourages hospitals to be less efficient and incur higher fees and more costs. It would force hospitals to be entrepreneurial for the benefit of all the stakeholders and not simply themselves. I would guess implementing a new system will be delayed even longer than one year, especially with the change in administration in the next year. Hospital systems are not interested in real price transparency. They will fight it. I believe they are blindly encouraging government price controls. Price controls historically make things worse in every area of our economy.

If we as consumers do not force the secondary stakeholders to get smart we will end up with a single party payer system. Hillary Clinton’s new healthcare plan is heading us in that direction. Her 2007 words are crafted differently than her 1993 plan. Her 2007 healthcare plan will evolve to a single party payer plan. She has changed her direct approach. She has gotten her strategy from organizations like the Commonwealth Fund who are advocates of a single party payer being the only solution to our healthcare systems problems.
A full discussion of Mrs. Clinton’s plan will follow shortly.

I believe the government wants to help the people. What is the reason government initiatives misfire? They misfire because of the inefficiencies in hierarchical bureaucracies. The hierarchical bureaucracy is imbedded in all of our government agencies and in our body politic. Governmental decisions are influenced by vested interest’s lobbying and not by common sense.

There are a lot of very smart people in America. We have figured out the solutions to many problems in the past. Winston Churchill said “the American government always does the right thing after they have tried everything else. He might be right. “

The public can overcome the archaic bureaucratic structure of our government. We need an entrepreneur to step forward, recognize the patterns, be innovative, make the repair, and profit from his innovation. The repair will be driven by our knowledge based economy. The healthcare system can to be a healthcare system for the public good without price controls that do not work, single party payer systems that do not work and government restrictions on access to care that does not work.

We as consumers must become concerned enough and disturbed enough at the present healthcare system to generate the will to act in a constructive way to improve the system to the advantage of everyone. We have an excellent medical care system. We have a dysfunctional healthcare system. I believe the American consumer is getting there. We have at least forced a change in Hillary Clinton’s rhetoric but not in her policy. The solution in a free market system is to construct a system that will function for the consumers’ benefit and not the vested interests’ benefit.

Stanley Feld M.D.,FACP,MACE

Medicare Part D is the drug benefit insurance for Medicare recipients.
The government constructed a program where the healthcare insurance industry sells insurance to provide prescription drug coverage.

There are various plans available from various healthcare insurance companies charging various prices. The healthcare insurance industry would call it competitive pricing. However, without real price transparency, multiple pricing is meaningless. The real important price is the price the patient is charged against his doughnut verses the price the healthcare insurance company pays the pharmacist. The various plans are confusing, to say the least. The plan outlines have been standardized by the government. The prices for the various healthcare companies’ plans have not been standardized.

If we drill down deeper, the price the healthcare insurance company pays the pharmacy has not been standardized. The industry negotiates that price with the various pharmacy chains. The price the healthcare insurance company charges the patient is applied against the patient’s doughnut. The patients’ doughnut (coverage gap) kicks in after the patient purchases $2200.00 of drugs. Therefore, the higher the price the healthcare insurance company charges the patient’s account for a medication the faster the patient hits the doughnut and the faster the patient pays full price for the medication. The price the healthcare insurance company applies to the patient’s doughnut has nothing to do with the price the healthcare insurance company paid the pharmacy for the drug. This is the place the fairness to the patient breaks down. Many seniors who have purchased these plans, in order to feel financially secure, are now discovering the deception in these various Medicare Part D plans.

Richard Jellicoe writes; “I have Medicare Part D from AARP. UnitedHealthcare
is the carrier. UnitedHealthcare offer drugs with co-pay almost twice what I can get the same drug via cash. I guess that is how UnitedHealthcare can pay its fired CEO $5 million a year in retirement.”

He goes on to say:“What amazes me is that AARP endorsed this company when it was time for 2007 Medicare sign up and it was not till many months later that AARP acknowledged that it’s endorsement of UnitedHealth care was a paid endorsement. And AARP is supposed to help the seniors.”

Consumers can not assume the government will protect them. It has not in the past. You can not assume that organizations like AARP who advertise that they will protect you will protect you. Consumers must become sophisticated buyers of healthcare products. Consumers have trained themselves to become sophisticated buyers of other products such as automobiles, electronics, food, clothing, and housing. They have learned to receive good value and have created competition among vendors for their dollars.
The healthcare insurance industry continually says that consumers are not capable of dealing with healthcare pricing. If you think about it our most precious possession is our health. We should be most responsible for our health and the price we pay to maintain it. I know consumers can be very smart about healthcare consumption if they owned their healthcare dollar.

Mr. Jellicoe goes on to say “I have been reading everything I can find on UnitedHealth Care. I have been amazed on how those in the know understand the lack of ethics at this company. The thought of 90% of Nevada being under the control of this corrupt company frankly scares me to death.”

Mr Jellicoe, you have defined a monopoly. Our government is supposed to be working for us and not for the healthcare insurance industry. Consumers have to demand that our government does something about your complaint. The problem is most consumers are not aware of these abuses. Our sources of information (mass media) do not provide detailed information. Detailed information does not hold our attention and attract advertisement revenue. We are an inpatient, sound bite society seeking sensational stories. However we become very concerned when an issue affects us directly. The broken healthcare system is directly affecting us all now. I believe as a people we are very smart. We are starting to demand a solution. However, the government has put the fox in the hen house to protect the hens. The hens will not be protected.
One of the reasons I am writing this blog is to try to get the people who are not sick to pay attention to what is going on. The healthcare system needs to be fixed before we get sick and need medical care and medical drug benefits.

Many years ago a well connected patient of mine was an advisor to several U.S. Presidents. He was working on stopping drug trafficking to the United States from Mexico and South America. Hundreds of millions of dollars was laundered through Miami banks. His assignment was to convince the banks to stop laundering drug money. One day I asked him why congress doesn’t just pass a law revoking the banking permits.
In his frustration, he said “most people do not know what they vote for. They do not express their opinions to how their congresspersons should vote in congress.” He said the law could not be passed because of the banking lobbys’ influence in congress. He also said” we as a people get what we deserve. We have the right to demand the appropriate action. We do not exercise that right. Until we start paying attention to what is going on and get rid of the politicians who do not do what is right out of power nothing will change”.

“All of the news in the press is about unimportant issues. Th “news” is a distractions from the real needs of the people. None of the important issues are covered in detail so that we rarely know the real issues. “

It is important to notice that the only easy way Mr. Richard Jellicoe can express his frustration is through the new media, the blogosphere. Will the new media be effective? I hope it will. Americans’ are not a stupid people. Our freedom of speech is precious. Social networking of a concerned population will change the paradigm of healthcare insurance to a consumer driven healthcare paradigm.

Do you think the Insurance Industry should own the healthcare system? My answer is no! Do they? Yes!

The healthcare system should be owned by the patient. The patients should own his healthcare dollar. This is the only way that competition and innovation can be stimulated. The necessary paradigm shift is not going to be driven by the insurance industry, the hospitals, or government officials under political influences. The government can only do the right thing with the appropriate leadership. It seems to me the only potential presidential candidate that has the slightist clue to repair the healthcare system is Rudy Giuliani.

Last week Mr. Giuliani called for “transforming the way health care coverage is provided in the United States, advocating a voluntary move from the current employer-based system to one that would grant substantial tax benefits to people who buy their own insurance.

“He proposed tax exemptions of up to $15,000 per family, allowing individuals to direct that money toward the purchase of health insurance and other medical spending. He also said he opposed any government mandates that would require people or businesses to buy insurance, which is central to the universal health care plan neighboring Massachusetts, passed in April 2006 when Mitt Romney, a Republican rival, was governor there.
In order to help the poor or others struggling to afford health insurance, Mr. Giuliani said he would support vouchers and tax refunds along with savings incentives. ”

I believe Rudy Giuliani’s rhetoric is a relatively meaningless sound bite at present. However the sound bite is on the right track. I believe if his campaign gets off the ground he will be willing to learn from physicians and patients. He would be capable of leading us out of the morass we are in. He also believes the healthcare issue is a vital issue. I think he believes in sound business principles. He seems to understand the problems of the dysfunctional healthcare insurance industry.

Mr. Giuliani understands a good deal about how the free market economy works. He believes in the power of the consumer and people power. He also understands how dysfunctional systems can be repaired. Recall that he took a totally dysfunctional New York City riddled with crime and corruption, and transformed it into a functional and civilized city. He also angered a lot of the established vested interests along the way. However, most were grateful that he broke the log jam.

He transformed the national view of New York City and its people. He stimulated an unprecedented prosperity for New York City and New Yorkers at a time when companies and industries were moving out of the city. I recall being picked up by a limo driver in New York City on the way to a press conference several months after Mr Giuliani was elected. I always figure that New York City limo drivers know more about what is going on in the city than anyone else. I asked the driver what he thought of Mr. Giuliani. He said “Rudy is great. He took three police forces that did not work and made them into one police force. Believe it or not the police have been energized. The police force works. We all feel safer.” My silent response was “holy cow”. I did not think New York City had a chance. Maybe Mr. Giuliani was lucky.

Many feel the same way about the healthcare system. Repairing the healthcare system doesn’t have a chance. I think they are wrong. The healthcare system can function with the principle stakeholders, the physicians and the patients, in charge and the consumer driving the system.

I also believe Mr. Giuliani’s campaign has many problems. Many people will be against him for his views on other issues. His seemingly logic approach to the healthcare issue makes him the only possible shining star presidential candidate for the healthcare morass. He does not have the formula for repair quite right, yet he maybe a fast learner, if there is such a thing in a politician. He may also be able to stimulate a more attractive candidate to understand the desires of the people as it relates to healthcare. We need to put the people in charge not the insurance industry or the government.

Stanley Feld M.D. , FACP, MACE

Hopefully, many of you have found that physicians are kind people. Physicians do not want to fight with anyone. Most physicians love medicine and appreciate the privilege of helping people who are ill. The pressures and distortions of practicing medicine in our healthcare system have led to a spinning of the kindness of physicians in an ugly way. Healthcare is a big business. It is a two trillion dollar a year business and rising. This two trillion dollars does not include money customers spend on products and services to keep themselves healthy such as megavitamins, personal trainers, health foods, and health clubs just to name a few. This additional industry is estimated to be one hundred billion dollars.

The insurance industry is in business to maximize its bottom line. Most of the healthcare insurance companies do not have sophisticated information technology systems to accurately measure data it presumes to measure as illustrated in my last blog entry. It has legacy systems that can not handle the complexity it has built into its approval and payment system. It also does not have an interest in understanding the complexity of the medical transaction between the patient and physician (patient-physician relationship).

Despite these facts, the government and its Medicare program have authorized various insurance companies in various states to adjudicate Medicare claims at a substantial price to the government. The less the insurance company pays to providers the more the insurance company makes from these administrative tasks. United Healthcare is not the only villain. Aetna has also taken advantage of its power to the disadvantage of the patient and the physician. Physicians are finally starting to fight back and expose the abuses of the insurance industry. The states local authorities are responding to the physicians and patients pain. Below is an order by the New Jersey Department of Banking and Insurance fining Aetna Health Inc. I am publishing this order because it is important that this decision does not represent another tree cut in the forest with no one around. It should be heard by as many people as possible. Employers, patients and physicians must hear this loud and clear. It emphasizes that there is something People Power can accomplish.

“Aetna ordered to cease unfair limitation of Medicare payments

In a victory for physicians around the country and a strong message to health insurers nationwide, the New Jersey Department of Banking and Insurance (DOBI) fined Aetna Health Inc. almost $9.5 million for an attempt to pay certain out-of-network providers what it deemed a “fair” amount—125 percent of Medicare—rather than the providers’ billed charges. According to the DOBI ruling, Aetna must directly pay the affected providers’ billed charges, in reparation, for certain services rendered out-of-network.

The $9,457,500 total penalty is among the largest that DOBI has ever levied against a health care insurer. The penalties include:
• $650,000 for misrepresenting its obligations in letters sent to 130 providers (amounting to $5,000 per offending letter)
• $7,747,500 for not attempting, in good faith, to effectuate prompt, fair and equitable satisfaction of the claims for certain services
• $530,000 for not providing its Health Maintenance Organization members and patients the right to be free of balance billing by providers for medically necessary services that were authorized or covered
Richard J. Scott, MD, president of the Medical Society of New Jersey, credited DOBI Commissioner Steven M. Goldman for the ruling.
“DOBI’s order demonstrates that [he] understands the hardships New Jersey’s physicians and their patients can suffer because of the actions of health care companies,” Dr. Scott said. “We commend DOBI for its response to Aetna’s actions, and we appreciate the time the commissioner has taken during the year to listen to what New Jersey’s physicians have to say.”

Physicians are starting to fight these abusive tactics all over the country as demonstrated by the Seattle physicians’ action against Regence Blue Shield in Washington State.

The various state boards of insurance are finally siding with patients and physicians. Hopefully these actions will act as a further deterrence to continued abuse.
Recently I received a comment from EC:

I was in Director of Finance and CFO roles where one of my primary responsibilities was evaluating and selecting health care coverage for several hundred employees and then managing the plan (as best as one can – it’s more similar to a rodeo ride where you just try to hang on). Unrelenting (and unapologetic) double digit increases every year. From first hand experience, I can honestly say employers really want to give their employees the absolute best coverage they can but the forces in the industry have them on their knees. If any other expense line item in a company’s income statement experiences half that amount of year after year increases, the person responsible would be shown the door – quickly. But, regarding healthcare, companies honestly try their best to put up with it. I wanted to share that so you can understand my perspective. Our goals are the same – the best, affordable healthcare – but we come at it in slightly different ways.

I absolutely agree with EC. I believe that employers want to give their employees the absolute best coverage they can afford. The insurance industry has priced itself out of the marketplace by inefficient legacy information technology systems, inappropriate incentives, lack of understanding of medicine, restrictive inappropriate pricing, a lack of innovation and a lack of incentive creation. It is not the employer who is at fault. .

The insurance industry must think creatively if the healthcare system is to be repaired. If the patients owned the healthcare system and their own healthcare dollar in a price transparent, price justified system, with equal tax treatment for all, and the possibility of the patients saving money for retirement if they treated themselves appropriately, a market driven system would emerge that would drive all the prices down as the consumer has in other industries. Wal-Mart is a perfect example.

The answer is not price controls. The answer is not artificial price manipulations. The answer is market driven prices that will be determined by consumer demand.

I hope no one thinks that the penalty Aetna suffered in New Jersey will actually hurt Aetna. I am sure the penalty will be built into the next premium Aetna charge to its 400,000 New Jersey customers.

It is time for employers and consumer alike to say we are not going to take this any more. It is time to demand that the government to set up rules that treat everyone fairly. If the consumer drives the healthcare system the consumer can make this happen. It is time for the insurance industry to realize it is killing the goose that laid their golden egg.

Stanley Feld M.D.,FACP,MACE

l
On July 24, 2007 the Washington Post headlined an article entitled “Doctors Rated but Can’t Get a Second Opinion: Inaccurate Data About Physicians’ Performance Can Harm Reputations.”

In our dysfunctional healthcare system tensions are building to great heights between the insurance industry, patients and physicians. The appearance of this article makes me think that the insurance industry subconsciously has a death wish to completely destroy the Healthcare system. The insurance industry is totally insensitive to patients and physicians. Its only concern is its bottom line and seducing employers to buy its product.

The healthcare insurance industry truly believes it owns the healthcare system and can push anyone around. It can force people to do anything it wants. I do not believe this bullying can last.

“After 26 years of a successful medical practice, Alan Berkenwald took for granted that he had a good reputation. But last month he was told he didn’t measure up — by a new computerized rating system.
A patient said an insurance company had added $10 to the cost of seeing Berkenwald instead of other physicians in his western Massachusetts town because the system had demoted him to its Tier 2 for quality.

No one notified Dr Berkenwald about his demotion to a Tier 2 doctor. You will also note that none of the insurance executives have taken a cut in their salaries. However, they feel compelled to cut costs, to keep the health insurance premiums down.

“In the quest to control spiraling costs, insurance companies and employers are looking more closely than ever at how physicians perform, using computers, mountains of health claims and billing data and sophisticated software. Such data-driven surveillance offers the prospect of using incentives to steer patients to care that is both effective and sensibly priced.”

You might recall the surveillance Blue Cross Blue Shield used on Dr. Petak. They made him a second tier physician because he used a medication that helped patients become pregnant without the use of expensive invitro fertilization. The fact is Dr. Petak saved the insurance company tens of thousands of dollars. So much said for automatic surveillance.

Why can’t the health insurance industry learn to use some common sense? The answer is they do not have to.

“It also raises questions about the line between responsible oversight and outright meddling in the relationship between caregivers and their patients. And it shows how people such as Berkenwald are at risk of losing control of their reputations as corporations and other organizations mine electronic data to draw conclusions about them and post them online.”

This is especially true when the criteria they use to judge performance might be faulty and have nothing to do with that physician’s clinical outcomes. There should be some serious consequences to the healthcare insurance industry. The interesting thing is the power to regulate the healthcare insurance industry belongs to the individual states. The state insurance board gives permits to the healthcare insurance companies to sell insurance in each state. It would be interesting if we had some local leadership exert its authority.

“The trend is in its infancy, but such programs are already in more than 100 insurance industry markets or regions across the country, from entire states such as Massachusetts to metropolitan areas such as Los Angeles.”

If the insurance industry can get away with the insanity, why not? It will increase the healthcare insurance industry’s bottom line. It will also result in a reduced payout in fees to physicians. Worst of all it will result in a decrease in medical care to the patients.

” Supporters say the programs have slowed the rate of growth of insurance premiums by 3 to 6 percent in their first year.”

I would like to see the statistical evidence for this minimal decrease in insurance premium growth. I would like to see the absolute dollars saved. I would like to see the reduction in premium. I would like to see if insurance executives’ salaries have decreased also.

Arnold Milstein, chief physician for Mercer Health and Benefits, a health-care consulting firm based in New York, whose firm is analyzing data for the Massachusetts program that ranks physicians said:

“In every industry, consumers have a thirst for performance information, “People don’t want to go to a movie or buy a book or buy a car or go to a restaurant without some ability to assess value for dollar. What’s taking place here is inevitable.”

Dr. Milstein is gathering data for the insurance industry’s benefit and not for the patients’ benefit. The information gatherers do not even have the meaning of quality medical care defined accurately. These consulting companies also make multiple collection errors because of their lack of understanding of the therapeutic contract (patient-physician relationship) and the analysis of inaccurate information.

“Physicians who have been profiled, including those with top ratings, say that the data often contain errors and that doctors often lack the ability to correct them. The effort is more about cutting costs than raising quality, some say, adding that doctors could begin to “cherry pick” healthier patients whose problems are less costly to treat. Such systems fail to capture the intangibles of quality, such as a doctor who visits a dying patient at home, critics say.”

In my view this is absolutely the wrong way to go about fixing the healthcare system. It is the way to destroy and demoralize the physician work force. It is a way of depleting a talented pool of physicians developed through years training. It is a great way of producing a physician shortage. It is a way for the healthcare insurance industry to make the physician community never trust you and never want to cooperate with you. At this moment in history cooperation is essential.

This is the reason I have been advocating consumer driven healthcare. The healthcare insurance industry has little concern for our well being. Its concern is for its bottom line.

It is especially clear that the healthcare insurance companies do not understand the value of the therapeutic contract (patient-physician relationship). Physicians and physicians’ organizations would like to ignore all this noise. They have better work to do. Their work is taking care of patients who are sick. However, we can not ignore this insanity any longer.

The information about quality has to be collected accurately. If a physician is not practicing quality medicine he should be taught how to improve by his peers and not punished by a third party with an unusual agenda.

As I stated, quality is not defined by how many tests you do but by your clinical outcomes. A recent NEJM article reported the British healthcare system is going broke by rewarding quality improvement measures. Clinical outcomes have not improved significantly.

“Doctors are rated on standards of quality of care and cost efficiency. An internist, for example, gets higher ratings on quality if he puts his heart attack patients on beta blockers, a medicine that reduces the workload on the heart, or if diabetic patients are tested for blood-sugar control.”

Just imagine the worst physician in a community figuring out what tests would give him a high rating and increase his income. He does the required tests routinely whether the patient needs them or not. He misinterprets those tests to the detriment of the patient. Yet he is rated the best doctor in the town. It is like a bizarre Fellini movie

The healthcare insurance industry is doing absolutely the wrong thing to improve the healthcare system. It thinks it owns the healthcare system. Their consultants do not practice medicine. They believe they understand the principles of good medical care. They also believe they can measure quality medical care and penalize physicians who do not adhere to their rules. Unfortunately, they are wrong. Unfortunately, patients will suffer.

The only stakeholder that will fix this system will be patients and not the healthcare care insurers.

“

Stanley Feld M.D.,FACP,MACE

The hospital systems and the insurance industry have archaic and unscientific methods of determining price. The combination of the methods of pricing and the excess cushion built into the price leads to the excessive profits, salaries to executives and excessive building and remodeling. I look at this as creating a perfect opportunity for creating a competitive environment on pricing between hospital systems and between hospital systems and physicians practices. It also is a perfect environment for insurance companies to compete with each other. The result would be lower premium prices. If one insurance company made a move to lower prices, increase efficiency and decrease consumer grief, the others would follow. The insurance industry has some leeway on pricing because of their excess profits. Naturally, hospital systems and insurance companies do not want to give up this profit advantage. This is the reason hospital systems and insurance companies have lobbyists in State Governments and in the Federal Government. When consumers are in charge of their healthcare dollar and can profit from its wise use, they will force the insurance industry to lower prices.

All that is need is to pass a few rules and regulations by the politicians in government to create this price competition. The rules would include present price transparency, reporting on the methods used to determine the prices for hospital services and the price of premium creation, as well as the patients’ access to this pricing mechanism. If the politicians in government had the courage to act on these suggestions the mess in the healthcare system could clear up very quickly.

The people and not the insurance industry should have control of their healthcare dollar. If the people use the control over their healthcare dollar wisely, the money saved would grow in a tax free trust account each year to be used at retirement. This concept is embodied in my ideal medical savings account. The insurance companies would adjudicate the claim. However now it would be done instantly decreasing administrative costs for the insurance companies, the hospital system and the physicians. They would continue to negotiate the best fees for the patient. If they did it poorly the people would move to another insurance company. They would receive the privilege of holding the insurance premium and the trust account money. They would provide pure insurance if an illness cost more than $6,000.

Community rated group insurance would be available to all with pre-tax dollars. People would can not afford insurance would be supplemented by the government. This form of insurance would also apply to Medicaid and Medicare. It would be universal healthcare in a consumer driven and controlled system rather than universal health care in a single party payer system.
Doing all this at once would force the hospital systems, the insurance industry and physician to be more efficient. It would accelerate the development of the ideal EMR and decrease money wasting inefficiency in the healthcare system.

The most important stakeholder in the healthcare system is the patient. Somehow, the patient has been converted from a person with an illness and needs medical care, to a person who is a potential financial asset to the facilitator stakeholders. It is not uncommon, in the halls of facilitator stakeholders to hear patients referred to as clients, lives and eyeballs. “The more lives you have in your healthcare system, the greater the revenue and the greater the profit.

Without patients there would not be a healthcare system. The conversion of patients to economic entities is partly a result of the advances in technology and partly the dysfunctional evolution of the healthcare system. CAT scans, MRI scans, and stress echocardiograms and others have served to make the patient a commodity. All these test procedures generate revenue. The organization performing the testing generates the revenue. If patients owned their healthcare dollar, prices for services were transparent, and physicians’ offices were able to compete with hospital systems for procedures that are presently not permitted in the physician offices, all the stakeholders would be driven to more accurate pricing and more efficient care. The price of care would drop. The Lasik procedure is a perfect example of prices dropping in a consumer driven competitive marketplace.

At the same time, the government and the insurance industry are complaining that the physician does not practice evidence based medicine. Patients ought to have a mammogram once a year, a colonoscopy every five years, and a bone mineral density every two years, to name a few preventative screening tests.

The reality is that the increased technology has lead to increased accuracy in early diagnosis and early treatment. The result is a decrease in complications of chronic disease. The complications of the disease absorb 90% of the healthcare dollar. The technology has increased the diagnostic skills of the physicians. However, with the restrictions imposed by the facilitator stakeholders to not allow the physicians to do the testing in the office, and the inefficiencies of getting a hospital system scheduled procedure prevents the physicians from consistently practicing evidence based medicine. The implication is if the physician was permitted to do the test in his office, the physician would over test. This implies physicians are crooks and will take advantage of the patient. Ninety eight percent of physicians aren’t crooks despite what Pete Stark (D-Cal) says. It is easy to stop that 2%. However, the inefficiency in the healthcare system does not permit the physician to give appropriate preventive care to the patient.

Cognitive services are essential to accurate diagnosis and treatment. Yet, the skills these cognitive services have been devalued in recent years. In fact, if payment for cognitive services was the only revenue a physician could generate he would not be able to pay his overhead. This is presently a crisis Family Practitioners are now facing. It seems obvious, that in order to increase ones revenue, one must do indicated ancillary procedures. The counter argument is the physician will be given the incentive to over test. If a test is done in the hospital systems the cost of the procedure is usually higher than when it is done as an office procedure. (remember Dr.David Westbrock’s example). Physician office testing would drive the hospital system prices down if the hospital system wanted to be competitive. It is in the vested interest of the hospital system not to permit a competitive environment. If purchasing of healthcare services was in the hands of the patient they could choice the provider and force a competitive environment.

Physicians have the privilege of helping patients who are ill get well. They also have the obligation to prevent disease. It is not only a privilege, it is an awesome responsibility. Physicians are medical doctors that provide medical care. Medicine is a princely profession. Physicians must be given to tools to provide efficient and effective care at an affordable price. The marketplace through patient control should decide the price. Hospital systems and insurance companies arbitrarily made up the price in the past. This has to stop.