The Nightingale Center

The Managed Care Insurance Game

Have you noticed that over the past six years, access to healthcare has become so problematic that most of us don't bother unless we are really in distress? Have you felt that the wait to see your doctor or nurse practitioner is exhaustive? Does it seem that you are only afforded one problem complaint at your visit and it always seems that you did not receive enough time and attention? Well here is the scoop on what is happening.

Long before the insurance game, doctor's made house calls, provided care, guidance, and support for the community. The doctor was reimbursed for services with cash or with goods. A relationship developed between the two parties involved. If the doctor performed well, then he or she maintained you as a patient and you received excellent care.

Insurance carriers long ago claimed that they would provide a mechanism to help pay for excessive healthcare cost (e.g. Surgery) but it was really to get in on the business of medicine. Initially, insurance carriers would ask a small premium from you the patient and would pay the doctor his/her fee at 100%. Then they decided that it was better to reimburse 90% - 80% of all fees and let the patient pay for the shortfall, which made additional moneys for the insurance company because they then got premiums from your paying for the insurance and would pay a decreased fee for healthcare. Physicians continued to provide the same level of care and concern as before insurance but now making 10 to 20% less for their service and acquiring the added cost of having to bill the insurance company. So the natural reaction was to raise their fees by 10 to 20% to make up for the shortfall.

All was still well until insurance's continued to raise premiums and provide less coverage causing the rates for procedures to continue to climb. In the late 80's Medicare (an insurance to the disabled or over 65 old group) decided to set up DRG's which was a mechanism to set cost for a certain kind of medical visit or procedure. For example, if you visited your doctor for a blood test, Medicare had a set specific discounted rate that they would pay for your blood test. Insurance companies started to use Medicare's reduced fee guidelines to set up their reimbursement rates. Nonetheless, patients were still able to see any doctor, and the doctor was paid between 90 to 70% of his or her fee. The situation continued to deteriorate to a product called Managed Care.

Managed care evolved as a means to control the rising cost of health care, or that is what the selling point was supposed to be. It told employers that they could buy insurance for their employees at a discounted rate. It told consumers (the patient) that they could see their doctor for only a $10-$30 dollar co-pay. It told physicians, if you join our panels of preferred doctors we will guarantee you a certain number of patients but at a reduced fee. Initially it sounded good to everyone. The fee for reimbursement initially equated to about 70% of the doctors usual fee and it was not a problem, because only 30% of patients had this type of insurance and most had old fashion insurance or paid cash.

Then the managed care product began to grow like a cancer, and making many demand for authorization, preauthorization, and special permission to perform very basic health care tasks. Each company developed their individual set of rules making it very complicated for the patient and doctor to track. It is now a very complicated process but in general, here is the result: In a Managed Care Program the cost to obtain insurance is still expensive. The doctor now is typically paid on an average 30% of their usual fee instead of 70%. Patients have a $10 to $30 co pay but they can not see any doctor at anytime and there are great restrictions on what tests, procedures or medicines that are allowed by the insurance companies. The doctor's office has to get approvals from the insurance company to perform a simple test and this requires a lot of time and energy and requires office staff to assist. It is very difficult to bill insurance companies, delaying the time of reimbursement to the doctor for three to six months.

Since many doctors are mostly care givers and not great business people, being reimbursed at an average of 30% of their fee and needing more staff to get all the special approvals, doctors have been forced to see more managed care patients to pay overhead cost and make a living. Doctors are pretty unhappy and patients are pretty unhappy. Look around you and you will see that some of the biggest buildings around us are insurance companies. The business relationship for health care is between your employer (who has decreasing choices) and the insurance company. The relationship should be between the doctor and the patient. It is a mindset. We are willing to pay more for dinner, manicures, pedicures, facials and for clothing than towards our health. This is the Managed Care game that we all bought into; this is what they sold us under disguise.

I am not saying that all insurance is bad, but Managed Care is sometimes dangerous and doctors and patients should become more proactive in leveling the playing field. . Whether you are a healthcare provider or not, everyone needs health-care. If we refuse to accept the bad insurance's, the insurance company will have to change the product that they provide, because insurance companies make money from premiums and loose money on paying claims. It is my hope that patients and employers will choose the responsible health plans. Patients and doctors still have a choice.

© 2000 Sonja Gray MD
Yorba Linda, CA 714-993-2123