Insurance co.’s paperwork blamed for pushing health costs up
PORTLAND, Ore. – Supporters of a public option for reforming the nation’s health care system say all the paperwork required by insurance companies is a contributing factor to high health care costs.
Alisyn Shaw, a health care coordinator at Greenfield Health in Southwest Portland, said she spends hours each day calling to get authorization for patients’ medication and procedures.
“I’ve probably easily spent a couple of hours calling, calling back, leaving messages, getting a fax form, sending a fax, [and] waiting to hear back,” she said.
But Shaw said, as usual, the insurance company stalled.
“If we don’t really pursue it, if we don’t really fight for the patient, they’re just sort of hoping we take ‘no’ as an answer and stop trying to get something that costs the insurance company money,” she said. “In the long run they (patients) pay for it. They’re paying for the premiums, so why shouldn’t they get the medicine?”
Just at Greenfield Health alone, six people deal with the insurance companies all day. Then there’s the business side and more staff working through things like payroll.
“There are lots of different insurance companies and lots of different rules,” said Samantha Charles, vice president of operations at Greenfield.
Each insurance company has different plans, each with overly complicated codes. If there’s a wrong letter or number somewhere, the doctor won’t receive reimbursement.
Fortunately, Greenfield Health has an elaborate, expensive electronic medical-records system to help.
“You wouldn’t possibly be able to remember all of that in your head, and so that’s what our electronic medical records do for us,” Charles said.
Dr. David Shute, the medical director at Greenfield, said “The third-party vendor process, although it does hold down costs, appears to be shifting some of those costs to other parts of the system like physician offices.”
In fact, Shute said he and his staff spend more time doing documentation than they do with patients, which is time they can’t charge to insurance companies.
According to a nationwide study of close to 900 physicians and administrators published in Health Affairs, when all the time that is spent on paperwork is added up and converted to money, doctor offices spend around $70,000 a year just dealing with insurance claims and compensation.
Added up throughout the country the total is at least $23 billion to $31 billion a year.
“The only solution from a financial standpoint of this mess is to find immediate savings by getting rid of the insurance companies,” said Corvallis emergency room physician Dr. Paul Hochfeld.
Hochfeld produced a documentary on this topic titled, “Our Ailing Health Care.” He’s also one of the “Mad as Hell Doctors” traveling in an RV preaching health care reform.
“We’ve got a health care factory that’s supposed to be producing health and alleviating suffering, and 20 percent of the resources spent on it don’t contribute anything to the product,” he said. “In fact, servicing all these insurance industries complicates what the physician’s trying to do, which is take care of patients.”
Michael Becker, who works for Oregon’s largest health insurer, Regence BlueCross BlueShield said, “That’s a very common misconception about where the premium dollar goes.”
The Health and Human Services Department’s National Health Expenditures report, however, says that nationwide, private insurance companies will spend $179 billion on administrative costs this year and will take another $150 billion in profits. Oregon is different, in part, because it has more nonprofit insurance companies.
But Becker said, “Health insurance administration costs and profits combined are far less than 10 or 12 percent, and profits alone are far less than two percent – in Regence’s case this last year, far less than one percent.”
A state insurance report from the Department of Consumer Business Services titled “Health Insurance in Oregon” supports those numbers, but it also shows Regence BlueCross BlueShield made a profit as high as six percent in 2005. Its surplus increased from $235 million in 1998 to $52 million in 2007. That number is dropping but it’s still well above the minimum surplus the state requires just in case of an emergency – money kept in reserve.
“If just 15 percent of our members got Swine Flu and had to be hospitalized for three days, we would deplete those reserves in short order in a few weeks, so profits and health care administration are not the key drivers in health care costs,” said Becker. “It’s 90 cents of the premium dollar that goes toward delivering care. That’s where we have to focus our energy if we want a sustainable health care system.”
That’s why Becker said insurance companies have to rely on the best medical evidence when it comes to authorizations, but that doesn’t take away the frustration from medical staff like Shaw.
It’s really, really frustrating because we’re being held at the mercy of the insurance company when we’re just trying to get the patient what they need,” she said.
There is discussion that moving to electronic medical records will streamline the process – saving up to $315 billion over 10 years.
But others say cutting out insurance administration costs and profits alone would be enough to finance universal health insurance this year.
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