Maintaining in-network provider directories costs $2.7 billion annually

October 18, 2022 9:51 AM

The US spends more on health care administration than comparable nations. One estimate, based on 2021 data from the OECD, finds that the US spends $1,055 per capita on health care administrative costs—by far the highest amount on a list of twelve OECD nations plus the US. The next highest is Germany at $306 per capita.
posted by spamandkimchi (41 comments total)

but socialism
posted by lalochezia at 9:55 AM on October 18, 2022 [11 favorites]

this must be that private sector efficiency i've heard so much about
posted by Dr. Twist at 10:00 AM on October 18, 2022 [67 favorites]

"we can't have public health care because people like their private plans."
posted by entropone at 10:03 AM on October 18, 2022 [8 favorites]

And that doesn't even count the administrative costs we all absorb sitting on the phone trying to get screwed up bills fixed, arguing about coverage with our insurance companies, etc.
posted by COD at 10:09 AM on October 18, 2022 [38 favorites]

Snark aside, my dad is a psychiatrist who used to run a private practice. In the 1980s when I was a kid, he employed one person that did reception, office management and all of the insurance billing. 10 years ago he gave up and closed his practice. when he closed the practice he was employing 5 people for insurance billing alone AND he could only work for 4 days a week because he had to dedicate and entire day to dealing with insurance.
posted by Dr. Twist at 10:10 AM on October 18, 2022 [43 favorites]

There’s a tendency to think of the US as behind other countries when it comes to healthcare, but what if it is actually ahead? Capitalism running out of room to expand and instead turning on and cannibalizing it’s subjects. Other countries, particularly the UK, should expect to see it coming their way soon.
posted by Artw at 10:10 AM on October 18, 2022 [6 favorites]

I love reports like this, that provide specific information about intractable problems and list a variety of options for tackling them.

When I think of wasteful spending in US health care, I tend to think of things like advertising and marketing - if we had single-payer, we wouldn't need that nonsense. I DON'T tend to think about administrative costs in great detail, and I would never have guessed that

a review of relevant studies indicates that at least half of total administrative spending is likely ineffective (exhibit 1), meaning that it does not contribute to health outcomes in any discernible way.

(It's actually really helpful to have such a clear definition of "wasteful", as well.)

As much as I would love a single-payer health care system in the US, I am very intrigued by some of these actionable suggestions:

an improved quality measurement system could save up to $7 billion annually
...
Nationally, using a standardized platform for maintaining provider directories could save more than $1.1 billion per year, according to CAQH research.

$8 billion isn't a huge amount of the total:

wasteful administrative spending comprises ... 7.5–15 percent of national health spending (or $285–$570 billion in 2019)

- but still: $8 billion saved is $8 billion saved (and ideally repurposed for expanded Medicaid).

This is a great summary of a ton of existing studies. I'm grateful to have the opportunity to read it, and I plan to forward it to my congressfolk.

Thank you so much for posting this, spamandkimchi!
posted by kristi at 10:12 AM on October 18, 2022 [12 favorites]

The recent example in my year of dealing with my wife's complicated health issues was getting to the pharmacy after her outpatient surgery to pick up the three opiate pills they prescribed her for post-surgical pain relief only to be told that it required a pre-authorization. For post-surgical pain relief! From surgery they had already authorized!

Even worse, the pharmacist said I could just pay full price for them and I said yeah, how much?

Less than four dollars.

The insurance company wanted someone to fill out extra paperwork to preauthorize a thing the necessity of which was implied by the thing they'd already authorized, which presumably the pharmacy would have to submit, because obviously it didn't happen automatically, for a three dollar and some change prescription. So at least two different people would have to spend some of their paid work time to handle a bunch of bureaucracy that had no bearing at all on medical necessity - I got the pills anyway! They were already prescribed! - so that the insurance company could be extra sure they wanted to spend three fucking dollars.
posted by restless_nomad at 10:19 AM on October 18, 2022 [76 favorites]

The thing I've found particularly frustrating is how the insurance companies don't seem to be making any effort at all to be efficient, and by the looks of it may be intentionally avoiding efficiencies because every marginal inefficiency is also an opportunity for a profitable markup. They're not behaving primarily as patient advocates; they're behaving primarily as investment funds. The larger amount of money they have slushing around, even if it requires more employees and more busywork, the better the bottom line.
posted by fedward at 10:27 AM on October 18, 2022 [46 favorites]

Less than four dollars.

What's even more fun is when the cash price is less than the insurer's negotiated price. Not just less than the copay would be; less than the amount the insurer would be paying the pharmacy on top of your copay. Sure makes it look like the prescription price negotiation is a scam to hide profits.
posted by fedward at 10:34 AM on October 18, 2022 [15 favorites]

I used to work in a tiny division of a huge (and monstrously profitable) health "care" company. What we did was to negotiate complex conditions into flat-fee treatment programs instead of fee-for service.

On the surface, that sounded great. Then I worked on something called "BAPS", which was an abbreviation of "Billing As a Percentage of Savings". Turns out that what we did was to total up the list price of services (which here in the US are a complete joke) and then subtract our contracted rate. That gave us the "savings" for our clients, and then we charged them a percentage of the "savings". So if a hospital listed a treatment plan at $1MM but we negotiated it to $400K (which would still be a profit for the hospital), we'd charge 20% of $1MM - $400K, or $120K.

Not bad for adding nothing of value.
posted by Ickster at 10:43 AM on October 18, 2022 [5 favorites]

What's even more frustrating about these numbers is that, in my experience, health insurance and hospital companies aren't even competent enough to take your money. How many times have you had to deal with payment situation where you have the cash, and are trying to pay a premium or a bill, but the web interface doesn't work, and the people you can get on the phone have no idea how to help you? How many times have you entered information like your birthdate, claim number, and even your social security number in an automated phone system, then when you get someone on the phone, they ask you to repeat the exact same information? When you ask, they say "Oh, we don't have access to that info." Well then why were you wasting my time with the automated system?

The entire health insurance system needs to be burned to the ground, and its executives prosecuted for fraud and manslaughter.
posted by vibrotronica at 10:50 AM on October 18, 2022 [40 favorites]

In my work I hear about how these things are discussed by business & medical professionals and I'm here to report that they all think the problem is people getting too many MRIs & going to the ER too much. I suppress a lot of screams.
posted by bleep at 11:02 AM on October 18, 2022 [11 favorites]

So I am a vaguely middle-class person with "decent" employer-sponsored health insurance and modest dental insurance. But I have had no luck recently in finding anyone taking new patients for a dermatology exam I should have made 2+ years ago, or a dentist taking new patients, also for an exam I am behind on 2+ years.

And having wasted already some amount of hours calling around and exchanging messages about both, my enthusiasm/spoons for continuing to try is running out again (like it did the last time I tried), which is why my worrisome skin spots are still unidentified. Thank goodness for my electric toothbrush, I guess, and no severe current dental issues (probably).

And now a slightly more relevant cost story: My insurance refused to fill my thyroid meds at Costco more than 2x in one year (seriously WTF) - unless of course I switch to the generic which does not work as well for me. Costco said, you can just pay that, let me see how much it would be. Well reader, you may not be surprised to hear this far down the thread, that the Costco no-insurance price is a few dollars LESS than asshole insurance co price. 😡
posted by Glinn at 11:03 AM on October 18, 2022 [17 favorites]

Anyone in active healthcare* could tell you this, but it's good to have quantification. Between disability paperwork (not compensated by insurance), prior auth (ditto), answering questions within 24 hours, fixing icd10 codes, I waste a full day every two weeks with what I call 'office bullshit'. The rest is scattered over my workday.

On a side note, do other countries measure provider productivity? Do they do it with the miserly Relative Value Unit?
posted by cobaltnine at 11:06 AM on October 18, 2022 [4 favorites]

I've had a ringside seat to this as my wife has been setting up a practice providing therapy as an independent provider after many years with a regional healthcare provider. It's ugly for people practicing under a larger corporation that completely dehumanizes providers and patients and uglier still for a provider trying to work directly with an insurance company.

She's essentially written off a few of the early charges to said insurance company because the hurdles to getting paid don't seem worth the effort. She makes less money per session billing the insurance company, it takes longer to get paid, and there's additional spend navigating their paperwork, etc.

As a bonus, none of the therapists we've had appointments with as a family take insurance at all, so we get to pay quite a bit out of pocket for that care.

If we spent the money, resources and time that are consumed by the insurance industry and their counterparts with providers, we could have a healthcare system that would be the envy of the world.

Instead we have... this. In the end, it kills people through lack of care/access to care. And so many people are convinced socialized healthcare would be worse. I can't really see how.
posted by jzb at 11:26 AM on October 18, 2022 [18 favorites]

In all the decades I've been going to therapists, I have never gone to one who didn't eventually stop taking the insurance I happened to have at the moment. And they were all candid about the fact that it wasn't so much that they weren't being reimbursed enough as it was that the company required them to jump through so many hoops and spend so much time on admin and paperwork that it cut into their ability to treat their patients. Several times, I was told that they had been arbitrarily kicked out of the network, not told why, and not allowed to try to get back in.
posted by The Underpants Monster at 11:35 AM on October 18, 2022 [11 favorites]

I got a referral for a speech therapist for the Tiny Monster a few weeks ago. I set up an appointment and they called me back to let me know they weren't on my network and that it would be $340 for the evaluation and $140 a session. I called the pediatrician and got a new referral. That place told me that my insurance needed a pre-authorization but it was no big deal and they did it all the time.

We went for the evaluation and his first session. Then they called me back to tell me that I needed a pre-authorization and they'd have to cancel his subsequent appointments until I got one.

I think he finally gets to go back tomorrow. I may or may not have a $480 bill waiting for me.

And after all of that, insurance only pays for 20 sessions of speech therapy a year, so I hope he figures language out fast or he's going to need it to beg for food on the street when we can't pay the rent.

Some days I really wish I had never left Japan.
posted by The Monster at the End of this Thread at 12:00 PM on October 18, 2022 [14 favorites]

As we speak, everyone in the greater Baltimore area is wondering whether Johns Hopkins (an enormous hospital system with way too much political power) is going to continue to accept insurance from CareFirst (an enormous insurance vendor with way too much political power) because if one of these two behemoths doesn't blink, their little game of brinkmanship is going to make continuing to live very expensive for a lot of people.
posted by Faint of Butt at 12:09 PM on October 18, 2022 [10 favorites]

And so many people are convinced socialized healthcare would be worse.

This is the fundamental problem; everything else discussed in the thread arises from it one way or another.

…and it’s not merely that people think public healthcare would be bad — a surprisingly large percentage think it would be actively evil and are prepared to kill their fellow citizens in order to stop it. Remember the “keep your socialized medicine out of my Medicaid!!” poster during the run up to the ACA? These people are armed and aggressively stupid.

To fix anything else, that needs to be fixed first.
posted by aramaic at 12:34 PM on October 18, 2022 [7 favorites]

These people are armed and aggressively stupid.

To fix anything else, that needs to be fixed first.

But... how? Ignorance can be overcome, but not when it's paired with cruelty and an intent on remaining ignorant if the alternative requires changing one's mind.
posted by jzb at 12:40 PM on October 18, 2022 [5 favorites]

As we speak, everyone in the greater Baltimore area is wondering whether Johns Hopkins (an enormous hospital system with way too much political power) is going to continue to accept insurance from CareFirst (an enormous insurance vendor with way too much political power)

We just had this fight in Dallas between Texas Health Resources & UT Southwestern Medical on the one hand and Blue Cross Blue Shield on the other hand. Fortunately they came to an agreement before all my doctors went out of network.
posted by gentlyepigrams at 12:48 PM on October 18, 2022 [1 favorite]

but what if it is actually ahead?

It amazes me how the US seems to have managed to secure none of the benefits of either capitalism or state control when it comes to healthcare. I really don’t think anyone is following you into that unique pit.
posted by Phanx at 12:56 PM on October 18, 2022 [15 favorites]

We had a scare a couple of years ago where our insurance was going to make us out of network. Eventually they came to an agreement where we would accept our own insurance.
posted by Spike Glee at 12:58 PM on October 18, 2022 [7 favorites]

I am actually out of network for myself. Don't tell them that I think about my own health from time to time.

This came up with one of our residents. They are employees of the hospital whose insurance does not include our faculty practice group. When their baby was admitted to the NICU, everything was covered except for the daily physician billing (until they maxed out their out of pocket limit).
posted by a robot made out of meat at 1:28 PM on October 18, 2022 [5 favorites]

This is where I once again (maybe?) tell my story of the monthly poker game I used to play with a group of doctors.

For several years I covered the business side of health care for a newspaper. After a while, one of my physician sources invited me to play in their regular game. He was pretty centrist, but almost all of the players were serious Republicans, and a couple were what we'd now call MAGAs. One was elected to the state legislature on a hard-right platform.

It was a huge game, starting with 15-20 players at two tables, and always ran long as these guys would drink like fish and keep doing new buy-ins. Late one night in 2009 or 2010, the discussion turned to single-payer, in the form of a Medicare-for-all system, which was still on Congress's table then.

Every single one of these docs, even the MAGA guys, wanted to blow up the insurance system and go to Medicare for all. They said Medicare's rate was less per procedure than private insurers, but it always paid exactly what they billed, and paid on time, in a couple of weeks. And that's what you need when you're essentially an independent small business with a payroll and bills. Private insurers would fight them on charges for months and eventually downcode or reject procedures, and they ended up with less money than Medicare would have paid.

The only thing keeping the insurance system in place is lobbying and cash by the insurance companies.
posted by martin q blank at 1:35 PM on October 18, 2022 [40 favorites]

Should also link to the other research briefs on health spending...

The Role Of Prices In Excess US Health Spending

the US spent $6,624 per person on inpatient and outpatient care compared with $2,718 per person in comparable countries... The authors note that US patients have shorter average hospital stays and fewer per capita physician visits than patients in comparable countries, which provides further evidence that higher prices, rather than use, are driving higher spending on care in the US.

posted by spamandkimchi at 2:55 PM on October 18, 2022 [2 favorites]

What I find fascinating about all of this is, at least at first glance, Obamacare is essentially the Bismark model of providing universal health care, which is what is used in Germany, France, the Netherlands and Japan. Mandatory health insurance combined with private facilities is used in many countries around the world. But the United States makes an absolute hash of it. And it's not like the Germans are any stranger to paperwork. I would love to know how they avoid these paperwork issues.
posted by rednikki at 5:13 PM on October 18, 2022 [4 favorites]

The recently re-elected Conservative Government of Ontario has intentionally defunded public health care, resulting in a massive health care crisis, with predictable comments from Conservative Canadian media calling for private sector solutions.
posted by ovvl at 6:24 PM on October 18, 2022 [3 favorites]

German healthcare is pretty different from the ACA. Prices are regulated, and most health insurance comes from tax funded nonprofit “sickness funds”. Many more of the hospitals are publicly owned as well. It’s also not really tied to employment like in the US; although, employers contribute. You would consider it a multi-payer system, but it’s not anything like the multi-player plans proposed or in existence in the US. The history and logic for setting it up are/were completely different. Hence the lack of success and continued degradation of the US healthcare system compared to the German one (as well as the healthcare systems in other countries listed, which are all slightly different in their own way).

Commonwealth Fund link

Wikipedia
posted by eagles123 at 8:31 PM on October 18, 2022 [4 favorites]

It amazes me how the US seems to have managed to secure none of the benefits of either capitalism or state control when it comes to healthcare. I really don’t think anyone is following you into that unique pit.

Ten pounds says you're wrong.
posted by ChurchHatesTucker at 9:06 PM on October 18, 2022 [6 favorites]

Americans, here is your reminder that the UK has public health care, longer life expectancy than the US, and spends less than half per person compared the US. NZ has public health care, longer life expectancy than the US, and spends about a third per person.

Kindly metaphorically burn your entire thing to the fucking ground.
posted by happyinmotion at 12:46 AM on October 19, 2022 [2 favorites]

My favorite view of American exceptionalism in healthcare is this Economist graph which charts cost and life expectancy by country over 1970-2017. You can see the dismal outcome in the US where we spend 2-3x more than other OECD countries on healthcare and yet have significantly lower life expectancy gains. A little of this is unique to America's shittiness beyond the healthcare system, specifically our appalling rate of infant mortality among poorer mothers. Mostly it's just our shitty healthcare system though.

But this article is specifically about administrative expense. I'm struck that "Harmonized Quality Reporting" is such a potential source of savings. Even the most die-hard free market / healthcare capitalists would agree that being able to evaluate the quality of service is important. There's no ideological argument against quality reporting, it's 100% to allow shitty hospitals to not get caught out in how bad they are.
posted by Nelson at 1:24 AM on October 19, 2022 [2 favorites]

I DON'T tend to think about administrative costs in great detail, and I would never have guessed that

So, there's this famous economist Ronald Coase, who wrote a couple of famous papers on how transaction costs shape society. Particularly: why are there firms in free markets? For free market proponents, its a paradox that they're so common -- most folks don't wait for their boss to call and begin negotiations on whether you're coming in to work every day and for how much. Instead there's a command and control structure closer in form to the Soviet army than frontier trading posts. His answer is that transaction costs -- putting out RFPs, for example -- on every little thing is so expensive that it's more effective to perform some tasks "in house."

Medicine seems like a textbook example of this in action. Medical practices are tiny things of like ten doctors serving a few thousand people in a nation of millions, and the negotiation system is so onerous they have to hire full time staff to deal with it. The system is burning cash on people memorizing and fighting over billing codes, an outcome entirely predictable based on the organization of the market. In fact, this structure is enshrined in many state legal codes, prohibiting non-doctors from owning a medical practice, on the expectation that private practice doctors -- people with a median wage of 208k -- are less greedy than investors. Personally I estimate the investor-MD Venn diagram to be a 99 percent overlap and assume the laws do more to protect practitioners than patients.

The system is so far away from normal market that IMO single payer represents an improvement. If we can't have that, we should at least start tinkering at the margins. Make employer provided health insurance taxable. Find ways to grow group practices so they have the scale to efficiently navigate BCBS. Add pricing transparency for patients. Pass federal law prohibiting the practice of balance billing.
posted by pwnguin at 1:37 AM on October 19, 2022 [4 favorites]

Find ways to grow group practices so they have the scale to efficiently navigate BCBS

...or launch BCBS into the sun along with all the rest of them.
posted by sriracha at 6:05 AM on October 19, 2022 [5 favorites]

I am having a flashback to watching tv ads for DeVry and other for profit colleges promising a secure career in MEDICAL BILLING AND CODING. Like, if there's a burgeoning sector of the U.S. economy, it might be a warning and not a promising sign. Why did I just blankly accept that health insurance administration should be endlessly in expansion?
posted by spamandkimchi at 8:00 AM on October 19, 2022 [2 favorites]

that private practice doctors... are less greedy than investors

Find ways to grow group practices so they have the scale to efficiently navigate BCBS.

Being somewhat privy to the inner workings of this in dentistry I can tell you that investors are FAR greedier than most typical healthcare providers. Not even in the same league.

And making something larger for the sake of navigating insurance? Maybe, but the larger these groups become, the less concern there is for patient welfare from what I've seen.
posted by drstrangelove at 8:34 AM on October 19, 2022 [1 favorite]

or launch BCBS into the sun along with all the rest of them

Exactly. Single payer is the only way forward. I laugh in the faces of people who tell me that single payer will lead to denials and delays. In 2017 my wife needed a complicated surgery. We were paying $1700 a month for an ACA plan for our family. Even then we still owed tens of thousands out of pocket that we struggled to repay. And paying through the nose certainly didn't entitle us to speedy care. My wife waited *months* for the surgery.
posted by drstrangelove at 8:38 AM on October 19, 2022 [2 favorites]

I forgot to mention in my earlier post that a person I know working for one of the largest "DSOs" (dental service organizations) have said that when private equity comes onboard, it's always a shitshow. Basically these investor-class cretins aren't looking for a tidy little 7-8% return on investment over the long haul. No, they want to see 50, 100, 200% within 3-5 years! Usually the goal is to fatten up the hog as quickly as possible to attract an even larger DSO group (also funded by PE firms) to buy them at a huge profit. Often these groups are comprised of practices that are short on the real fundamentals and it's not uncommon after these acquisitions for offices to be closed as if they were just a discount shoe store or something.
posted by drstrangelove at 8:45 AM on October 19, 2022 [3 favorites]

Ten pounds says you're wrong.

Chances go up as the value of the pounds go down.
posted by Artw at 10:22 AM on October 19, 2022

Kindly metaphorically burn your entire thing to the fucking ground.

Easier said than done.
posted by The Underpants Monster at 10:25 AM on October 19, 2022