Saturday, June 7, 2008

Overly High Healthcare Administrative Costs And A Solution

Billions of healthcare dollars go to paying the salaries of the folks who have to handle healthcare claims – both from insurance companies and Medicare. There are all kinds of different insurance policies with variations in coverage. That means that healthcare providers have to employ people who are skilled in the complexities of the various plans. In a primary care practice that might be 2 or 3 people. In a large hospital, dozens of people. The insurance companies and Medicare also have many people working for them to ensure payment goes only to covered services. All of that adds up to a lot of money in administrative costs on all sides.

I have a solution. I propose the creation of a separately chartered, independent federal agency – like the Federal Reserve system – that would be a central clearing house for our entire health care industry – public and private. Let’s call it a “Health Bank.” The Health Bank would coordinate and perform many tasks now performed by insurers and healthcare providers. It would not only simplify the system and make it more uniform, it would decrease administrative costs to the tune of billions of dollars a year. At the same time it would maintain our present mix of private and governmental insurers.

The “Bank” would:

1) convene a biannual meeting of all insurance entities to define five standardized insurance packages. The lowest cost, plan 1, would cover all essential appropriate medical services. At the other end of the scale, plan 5 would be more expensive and include extras such as podiatry, massage, health club memberships, plastic surgery, etc. Plans 2, 3&4 would be successive gradations between plans 1&5.
2) determine fees so that primary care and regular hospital and nursing home care would be adequately reimbursed, thus providing for the rebuilding of primary care. It would eliminate the need for hospitals and nursing homes to stress often unnecessary, non-beneficial technological and procedural care to maintain solvency.
3) establish a central computer system through which all billing takes place and through which all insurers are paid. Insurers would compete by coming up with innovative preventative programs such as weight control, diabetes and blood pressure control, home health services for the elderly, etc. along with price competition for the five plans.
4) maintain an electronic medical record system for the entire nation with multi-layered safeguards to insure privacy.
5) require that all hospitals, nursing homes, other health providers and insurance entities (public and private) adjust their computer programs so that all could interface with the bank’s computers.
6) fund The National Institutes of Health (our major national research endeavor) by collecting monies from all insurers, governmental and private, in proportion to the percentage of the population covered by each one. This type of research is an investment for the future and should be funded by all carriers, not just the federal government.
7) fund graduate medical education (residencies & fellowships) through funding from all carriers in proportion to their market share and make payments directly to the educational entities.
8) pay the salaries and staff of the appropriate care committee system (local, state & national). (See post on Appropriate Care Committees)
9) require all drug and device companies to fund their clinical research through The National Institutes of Health which would oversee the experimental design and the results. This would remove the conflicts of interest that exist in the present system. The Health Bank would collect and distribute the funds.
10) be funded by fees paid by all carriers in proportion to their market share. The Health Bank, like the Federal Reserve, would report to Congress on a fixed schedule.

More details of how the Health Bank would work and how it would facilitate universal healthcare coverage are in my book In Defiance of Death: Exposing the Real Costs of End-of-Life Care. You can order the book from Amazon through the link here at the blog.

No comments: