When does cost to validate care outweigh cost of just giving care?

Factual Questions
1

In the capitation/HMO system, there’s a lot of money spent on determining whether or not to provide care.

At what point does the cost involved in determining whether or not to give medical care to a patient outweigh just giving the medical care to a patient?

I recently had a surgery rescheduled last minute because the insurance company said it needed to pre-verify whether or not 1 of 4 things they were going to do was for health or cosmetic purposes.

This means they already know for a fact that they’re going to operate on me to fix 3 health problems, but the entire surgery is delayed because of that 4th thing.

The person who called me to tell me that it was delayed mentioned that she had spent 3 hours on the phone with different offices trying to get them to convince them that it’s for health and not cosmetic. The medical group and insurance company apparently both needed to pre-verify it. Them verifying after the surgery wouldn’t do, they would automatically deny it, they needed to verify before the surgery. Hence her spending all these hours with these departments.

When she was unable to convince them ahead of time, they needed to reschedule the surgery in order to get pre-verification. She told me she needed to spend a few more hours getting it verified in time for the new surgery date. This is all insurance stuff, not medical stuff, that they’re working on here.

Meanwhile, I get a call from the hospital telling me they’re ready for me at the first time. No, they won’t be, because of the insurance thing. So I need to call the doctor’s office back and tell them to talk to the hospital so they aren’t waiting for me the next morning…
And I’m thinking to myself, how much money are we paying these people to do all this administrative BS which is only delaying care? Seriously … if she spent 3 hours already that day and was going to spend 2 more, that’s 5 hours of her time. Plus whoever she was talking to, that’s 10 hours of paid time people spend discussing whether or not to give me health.

Meanwhile, there’s a hospital staff prepared to receive me. They’re calling me to tell me about my $100 copay and to make sure that I haven’t been taking any Tylenol in the last 2 weeks. How much are they being paid to make these calls which are unnecessary?

And this is just stuff that’s visible to me. How many more administrators and other people are being paid that I can’t directly see, who are having discussions about whether or not I should receive care?
They finally made the decision to give me the care. But I wonder … had they decided not to … and if we ignore the cost of my health … how much money would the medical system have “saved” by not providing that care?
I think you’d have to compare:
The amount it costs to give the care
The amount it costs to not give the care

Not giving the care has a cost - you are paying a bunch of people to decide to not give the care. That money comes from somewhere. Surprisingly, it comes from … the people who are paying to receive care!
But you also add that same cost to when you are giving the care. Because they still have to decide to give the care.

It’s enough to hurt my head.

Anyhow, when does the cost to not give the care get close enough to the cost to give the care … that the system should just start giving the care?

I think we spent too much on administration and not enough on caregiving.

2

I seem to recall about a third of healthcare expenses are for administration. Seems ridiculously high to me, too. This site (pdf) backs me up, more or less, with a 31% figure. http://www.pnhp.org/publications/nejmadmin.pdf

On the one hand, if there were no checks and balances on cosmetic procedures, there would be a lot of folks getting cosmetic procedures. So that’s really what has to be weighed. If what they are doing to you is, say, liposuction, the cost of their administrative hoops only have to be less than the amount of cosmetic liposuction that people would bill if they didn’t check for medical necessity. I have to say, that could be a huge amount of money. It’s wasteful, but I wouldn’t be surprised if it actually does save the insurance company money. Every day that claim isn’t paid is a day they get to hold onto their money.

But somehow Canada is getting by with only 16.7% of healthcare costs going to administration.

3

Yes, but are the insurance companies being billed for these administrative costs, or just for the direct medical costs? If the administrative costs are just being subsidized by the surgery costs being higher there’s less incentive for them to care. If the hospitals could somehow itemize the administrative costs and force the insurers to pay them, whether or not the medical care is approved, things might change. I know, it’s not pragmatic, but it’s a nice fantasy…

4

The people who would make the decision to do something like this are the people who’s jobs would be cut if this action were to be taken. So, I don’t think you’re going to find a lot of people volunteering to itemize administrative costs.

Who was it that said something like … the purpose of legislation is to make more legislation? That seems to be what’s happening here on a massive scale.

I never said we should remove all checks and balances. It just seems that this particular situation was cut and dry. They’re doing a surgery already to:

  1. Remove cysts from tear glands
  2. Remove cyst from eyelid
  3. Cauterize tear duct
  4. Remove follicles from corner so they don’t poke the eye

And one of those four things becomes suspect. “He might be getting this done for cosmetic purposes, let’s get a paper filed beforehand. If he files it after the fact, even if we approve it, we won’t pay it, because it wasn’t filed before the fact.”

Yes, I know that “a line has to be drawn somewhere.” I’m not saying there should be no line. I’m just saying the line seems to be in way, way, way the wrong place.

My factual question is:
How can we measure this? I don’t mean, “Take x and subtract y and you get z. If z is greater than a, then we have a problem.” I mean, how can we (customers) of the medical system see accountability, and know what x, y, and a are?? It seems to me that the cost involved in denying care is close to or over the cost of giving the care (if you consider that we actually give the care some of the time, and we expend cost to consider denying it even when we give it).

5

The criticalpoint to understand is that the decision is not, and should not be, made just looking at your case.

Let’s assume they spent $10,000 on checking whether they would pay for a $5,000 procedure. Whether you actually needed it or not, it’d have been cheaper for them to not check. And whether they decided you really needed itor not, they’d still have been money ahead to have not checked.

That sounds like a no-brainer - the insurance company should never check for that procedure. Right?

Wrong.

The critical point is that if they don’t check you, 100 *other *people you’ve never heard of will decide they need cosmetic surgery disguised as whatever procedure you actually needed. The insurance company is spending $10K on you to avoid spending 100 * $5K on everybody else.

So the accounting problem you proposed that seems so cut and dried turns into a sociology problem of determining much petty nit-picking enforcement will deter how many other people from scamming the system.

6

I’m not asking to remove the line, just move the line closer towards patient care, and further away from earning profit for the companies.

I just received a phone call that I was denied a referral to a specialist who can confirm whether or not I have Ehler’s Danlos Syndrome.

So, the health maintenance organization who oversees my care has decided that it’s better to not determine whether or not I have a syndrome, which a surgeon says that I have.

So, my next step is to appeal it. So I’ve been on hold with someone for over 30 minutes. She has been on hold with the medical group for the same amount of time (she comes back to let me know she’s still on hold).

My point here is that … she’s being paid to wait on hold right now, and I’m wasting time from my life waiting on hold right now. The money going to pay her for this time comes out of the same pool of money that could be used to just treat me.

When she finally gets through to talk to someone about this denial, both of them are being paid for their time. That money comes from money that could be used to treat me.

The person who called me 40 minutes ago to tell me I was denied, was being paid to tell me I was denied from a pool of money that could, instead, be used to treat me.

My point, which I don’t feel has been addressed, is that we seem to be spending too much time and money denying claims. I think the line is drawn in the wrong place.

7

Yeah , but is there a treatment for the syndrome, and does it require that he diagnosis be confirmed ? I don’t know anything about your syndrome, but for the sake of example, let’s say there is a syndrome that for some reason, causes a person to be more prone to sprains than the average person is. And there is no treatment for the syndrome itself, only the symptoms- that person will always be more prone to sprains than the average person , and the sprained ankles and wrists are treated just like anyone else’s. Is there any value to spending money on additional specialists and tests if the treatment is the same either way?

8

Stories like this are entirely not uncommon; a similar one was dramatized in Crash I believe (police officer berating a black health insurance worker). I’ve seen a lot having been admitted to a hospital and working for the same one. I hadn’t been in the hospital before I started working for them (which was only for Y2K replacements), but doing so showed me a rather different side of the health care business. I actually find it difficult to believe that only 37% of health care costs are administrative - their definition of administrative is probably too narrow. A large reason why they have so many different health care professionals assigned to each floor is the stacks of paperwork they needed to fill out nearly unnecessarily.

I was sitting in the emergency room waiting to be taken upstairs (mental health issue, no imminent health risk) and heard them say that I had a room and they had “called report” and were waiting for my chart to be copied! I was baffled, given that I new there were immense numbers of computers throughout the hospital that were all linked together at least 10 years prior. Do they really have to copy all the notes the doctor and social worker made by hand onto a different sheet of paper and have me sit in the ER while I wait?

While there are Nursing Assistants that make sure patients are still alive and such, there still has to be an RN assigned to each patient for medical care. And there’s one for about every 8 patients. I’m not sure what all they do besides giving medication, but I’m fairly sure it entails a hefty dose paperwork. The actual medical care is provided by doctors, and in the psych case, social workers. And my doctor told me he spends most of his time typing or dictating notes, not interacting with patients.

While some of that falls under medical care, much of it is an administrative necessity caused by demands from insurance companies. Since each insurance company has different policies and each doctor/hospital does things differently, they have to do a lot of sparring to get what each other wants at the cost of the patient. I saw the massive amount of people that they employ to process insurance claims, and know the ridiculous hoops you have to jump through to get certain care approved. I’m a fairly libertarian person, but there are some things the government should get involved with because they should not be run for profit; health care is clearly one of these things. My own eyes have seen the ludicrously bloated state of modern health care in the private sector.

9

But you’re basing your point on one single personal anecdote. Why should anybody respond to a personal anecdote?

It may be true that the line should be drawn elsewhere. Other people have said that. There may have been one or two or thirty-six thousand studies of the subject.

And the reason the studies keep being done is that you can’t move the line in the current system, because there is no current system. There is a jumble of tens of thousands of overlapping systems. Any change that affects some people positively will unquestionably affect other people negatively.

Change has to occur at a metalevel that makes a net positive gain by reforming the whole set of systems. No one is quite sure what that change might be or even if it’s possible, although the Obama administration claims that it will issue policy on this.

In any case, this is not an answerable question. It’s a debate. Or possibly a pitting. Your personal experience is one of over 300 million different experiences of health care in the country. We’re not going to get anywhere analyzing it.

10

I hadn’t meant for my personal anecdote to be the pivot on which this event turns.

I could throw my 14 month anecdote to get treatment for my ankle, my 8 month anecdote to get treatment for my eye, and this syndrome issue has been only 5 weeks but is turning in to a longer one. But as you said, my anecdotes won’t move the issue.

I could throw anecdotes of my grandmother being given no treatment for shingles in the ER 3 months ago, just pain medication she’s allergic to. Or dozens of others. But as you said, these are only a few out of the many that occur.

How many of those patients receive an adequate level of medical treatment? (How do we determine adequate would be the next question)
But my main question in this thread is really about the % of the manpower and money put in to denying care.

The first line of defense for a medical system is how difficult it is to make an appointment.
Then the doctor who tries to give you the least amount of care that will keep you alive.
Even if your doctor states that you need care, there’s a group of doctors who try to deny requests for care.

I’m sure there are more levels involved here.
When I talk about this point, people like to say that the other side is that people get treatment for things that aren’t medically necessary. Obviously that’s not the correct place to put the line.

How about putting the line at: The doctor and patient both agree that the patient needs the care.

The doctor is a gatekeeper to care already. He can tell the patient he doesn’t believe the patient needs the care, and discuss it with them.

But … once the doctor says, “This patient needs this care,” why should additional money and manpower be put in to trying to deny care to the patient? The next level is a review board of doctors. Doctors who practice medicine and treat patients. Who are taking time out from treating patients to deny care to other patients. By taking time away from patients, they are already denying care - and then they stamp some requests for care as denied.
My observance is that too much effort is put in to denying care for patients.
Perhaps my question would be better asked if we could quantify it. Earlier in this thread, people have quantified a % tied up in administration.

What’s the % tied up in evaluating and denying care?