2013
The idea of so-called participating provider networks with each insurer negotiating the fees it will pay is absurd and now with leverage moving from insurance companies to providers because politicians think more competition among insurance companies is the answer, doing what we do is outright ridicules.
Eliminate the idea of networks and negotiate one set of fees for a state or geographic area. Insurers can then compete based on their own efficiency while patients will know exactly what the fee is and can choose to pay more or not.
Competition then shifts from insurance companies to providers thereby forcing them to become more efficient as well.
Here is how it can work. The state medical society, all insurance companies in the state and representatives from Medicare and Medicaid sit down and negotiate the fees that will be paid for medical services. The same fee for all.
Let’s say the fee for knee replacement is negotiated to be $2,500 plus $6,000 for the facility. No matter who provides the service, no matter which insurance you have the total payment will be $8,500.
Both health care providers, and insurance companies can maximize their profit by being efficient in their operations unrelated to fee payments. Insurance would pay 100% of the negotiated fee. [whether or not providers could charge more than the negotiated amount or if the payment should be less than 100% are questions that need additional consideration. There are pros and cons]
Because this would initially mean higher costs for Medicaid and Medicare and lower costs for self-insured employers and private insurance, some mechanism to smooth this variable would be necessary. Medigap coverage could be eliminated or greatly reduced in scope with part of those premium savings used by patients to pay a higher Medicare premium that would be necessary.
In the end all fees are totally transparent, all parties have less administrative costs, patients could avoid out of pocket costs and competition is based on the ability to manage overhead and expenses. Future increases in fees would be negotiated annually and would consider overall health care spending to assure increased utilization does not negate the fee setting process.
So, what do you think?
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