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This is Not The Way To Repair The Healthcare System: Part 3

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.

  • Mona Lori

    I am a huge fan of consumer driven market solutions for reforming our health care system. As a consumer advocate, I am heading up a grassroots initiative that uses social networking to help consumers find the best value for routine health care services. The website,, includes a directory of true prices for common health care services based on actual visits by individual consumers. The contents of the directory are contributed by consumers to share with other consumers. The website invites everyone to contribute, including the insured and insured, by anonymously posting prices they paid for routine health care services (such as MRIs, mammograms, x-rays, CT scans, vaccinations, office visits, dental and vision), along with their personal recommendations on the provider. The inspiration for started with a personal experience. Several years ago, I was trying to determine what my out of pocket cost would be for an MRI with a high-deductible health insurance plan. Since my deductible was not met, I knew that I was responsible for 100% of the MRI cost. After searching through my insurance plan’s website to find the best value, calling the plan’s toll-free number, networking with friends, and eventually calling local providers to ask about pricing, I concluded it was impossible to determine the price of the MRI in advance. The only way to find out the price was to go ahead and have the MRI and wait for the bill to find out what I am being charged for the service. This was unacceptable. Something needed to be done. If insurance companies and providers cannot or will not provide consumers with meaningful price data, how can we be cost-conscious consumers and make the most out of our health care dollars if we do not have the tools to help us shop for the best price and quality? This grassroots initiative is something that could be accomplished immediately without waiting for legislation to pass, complicated programs to be initiated, or wait for the country to decide how to reform our health care system. The site was launched last month and everyone is encouraged to participate. If achieves critical mass, and enough consumers participate to share prices – consumers will have collectively created a powerful tool to help make informed healthcare purchasing decisions. Everyone benefits by exposing health care prices. Consumers save money by shopping for the best value and eliminating wasteful spending on unnecessary procedures and overpriced services. Competition and choice drive down prices, improve services, spark innovation, increase patient care and improve quality. Be sure to check out and be sure to tell others about this consumer initiative.

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