Confusopoly – The mystery of medical bills

April 16, 2012 in health care costs, Hospital Bills

Scott Adams introduced “confusopoly” in his book “The Dilbert Future” defining it as “a group of companies with similar products who intentionally confuse customers instead of competing on price”.

Two articles in the past few days have raised this issue. Robert S. Kaplan and Michael E. Porter of Harvard Business School NY Times op-ed “Why Medical Bills are a Mystery” and the LA Times “Healthcare pricing still a struggle for consumers”.

Why am I bringing Dilbert into this? Because the two articles highlight the detachment from patient reality by both hospitals and physician organizations. I doubt most physicians would be similarly detached if asked directly by a patient. The next time you face the confusopoly, consider asking your doctor for help and let’s see who’s side they’re on.


7 responses to Confusopoly – The mystery of medical bills

  1. Adrian – Love the idea – wish the word has one or two fewer syllables!

  2. Your provocative ending to “see who’s side their on” implies that perhaps physicians have this information handy and choose to withold it to protect their pecuniary interests. I would like to offer another more practical explanation and suggest investigation of this could support a real solution to this problem.
    Health care pricing is a Rube Goldberg machine that is driven by the existence of dozens of payment systems that each commercial and government insurer employs. The number of services that providers of all types provide is staggering; there are more than 10,000 ICD-9 codes that providers must use to be paid by various insurers and payors. There will soon be many more when ICD-10 is implemented next October. And for each of these codes, there are dozens of payors that each physician must work with; each of these insurers has their own payment rate and policies and procedures for exactly how they must code and bill for and justify the appropriateness of that service. The number of billers and the infrastructure associated with this Rube Goldberg machine is equally mind-boggling.

    Adding to this complexity, each commercial insurer maintains dozens of products that each has different benefit designs, and coverage options that would impact the eligibility and coverage of any individual patient service to be different. Further, the huge growth of PPO products (now half of all commercially insured patients) also means that deductibles further complicate if/how much the patient might owe. Currently, providers have no way of knowing (without long and non-committal phone calls to a patient’s commercial insurer) where that patient is in their deductible and if they have 100% liability of some other amount.

    These are but some of the significant barriers to providers’ ability to answer the simple question of how much a particular service will cost. It is important to note that global payments fix none of this. Services under global payments are still paid on a fee-for-service basis and tallied up against a negotiated “budget” that the provider must try to stay within— bringing with it a whole separate set of administrative nightmares.

    There are simple solutions to enhancing price transparency. Providers would welcome a single base fee schedule (and billing policies and procedures) that all payors would use. Prices could still be negotiated as an inflator from that base schedule. The reduction in administrivia would be huge. Football fields of billers that currently spend their time ensuring they are billing to the exact specifications of dozens of insurers could be re-deployed to far more effective uses in the system. If a consumer wants to know how much a service is, they need only know the multiple (e.g. 120%) of the base fee schedule that insurer is paid. It would also make price disparities completely transparent and clear. If one provider is paid at 120% of fee schedule and another, for the same insurer is paid 130%, the consumer knows where to go to get the better value regardless of which services s/he ends up needing. Insurers will say that their fee schedules are proprietary and add value– personally, I fail to see it– it wastes resources and obfuscates pricing for everyone.

    One last comment, your link to “The Good News” raises an important question for Massachusetts. Why is it that the two largest commercial insurers In Massachusetts do not participate in Medicaid? A key component of the Grand Junction “magic” is that the providers are paid the same whether it is a commercial or medicaid patients. That is FAR from the truth in Massachusetts. How can we all be part of the solution when the largest insurers have opted out of the most vexing part of the problem– how we pay for the most vulnerable citizens. We will never see a system like Grand Junction if we have a separate, and definitely not equal, system for the Medicaid population. If Blue Cross Blue Shield and HPHC accepted Medicaid and paid all providers on a single fee schedule regardless of whether it was a commercial or Medicaid patient, providers could be blind to insurance status in the same way that they are in Grand Junction. Instead, providers who disproportionately serve Medicaid patients get paid half (or less) than those that focus on wealthier communities and get paid handsomely to do so. That inequality starts a domino effect that is unraveling competition in the Baystate. It’s fine to post links with hopeful messages, but we need to be real about the barriers we face to realizing anything close to that ideal.

  3. Dorothy, thank you for bringing up the Grand Junction example. It was the doctors in Grand Junction that took the initiative.

    The medical profession is diminished when it points to everyone else as the problem and effectively ignores the patient perspective. It’s the doctors that choose if and what EHR to install – and they do want the $30 B incentives. It’s the doctors that put up with secrecy clauses in insurance and EHR contracts that perpetuate the problem.

    Finally, I don’t for a moment believe that the costs are un-knowable. Companies have made a huge business out of processing medical bills. Todays EHRs are, to a fault by many observers, derived from billing systems.

    The federal government has done a pretty good job of producing standards (Direct secure email, BlueButton, ICD-10) and incentives. They’ve developed inexpensive and often-open source solutions, set up BEACON communities, challenges and got the VA, DOD and Medicare to demonstrate adoption on a national scale.

    It’s time for the physicians to step up and put their relationship with the patient ahead of the ever growing list of distractions.

  4. I don’t question your use of Dilbert-ese at all. If ever there was a system that personified Dilbert, it’s healthcare. Unfortunately. Both you and Patricia point out that the billing codes are what drive the system, ’cause that’s where the money is.

    The real issue at the heart of that conundrum is that patients have, for four generations at least, if not longer, been discouraged from asking questions about costs. Health insurance was seen as a nifty benefit for defense plant workers in WWII, since the plants couldn’t give raises. Now, 70 years later, what was intended as a short-term fix to wage controls is now a federally-mandated “business pays for healthcare via group insurance” model that is irreparably broken.

    However, the entrenched payer interests have managed to keep that “big black box of healthcare” – price information – so secure that even *they* can’t answer patient questions about what a treatment or procedure would cost.

    Posts like this, and discussions like this, are what will drive real change. In costs, in better outcomes, in better relationships between docs and patients, and in better health for ever’body.

  5. Dr. Gropper, the physicians in Grand Junction founded their own insurance company, Rocky Mountain Health Plan. It was with this vehicle they were able to socialize the costs of care for commercial and medicaid members. There were important barriers they didnt face that enabled them to doso. This combined approach to commercial and Medicaid business is essential to their model. In MA there are significant barriers to doing this. Competing with juggernauts like BCBS of MA and HPHC who, combined, make up 70 percent of the commercial market and have no Medicaid to cross-subsidize — is chief among them. The segmenting of the market between the commercially insured and Medicaid makes this blind approach to patients impossible. This is simply a fact that must be addressed if we hope to see a reformed system, not hand waving excuse-making. All stakeholders need to step up– but first we must remove the forces causing the vortex that our system has become.

    Your rejection of the complexities of pricing as a significant challenge to transparency (and a massive waste of resources) is curious. Shouldn’t we strive to simplify the Rube Goldberg machine? What value could this possibly add? There are vexing problems in healthcare- simplifying our payment and pricing system isn’t one of them.

    • My comment is to the lack of advocacy and detachment of most physicians from this problem. The AMA formally lobbied to delay implementation of ICD-10 – detailed codes that could help clarify charges. The AMA also keeps a lot of the coding proprietary, making it more difficult for innovators to provide information services to patients and physicians. The patient portals at MA hospitals do not provide simple downloadable BlueButton files (including claims info) that all VA, DOD and Medicare facilities do.

      I’m simply proposing physicians make transparency of health records, open codes and costs a priority. Doctors can take the lead as patient advocates in posting the codes and charges and by making the records available for download to the individual.

      • Fair enough. Though the physicians in MA who DO advocate for this — and there are many– are drowned out by those who are paid excessively and have the resources to persuade the media and lawmakers otherwise. The massive resource imbalance in MA– which Globe recently and in my opinion imprudently, editorialized should not be addressed– is fueling a race to the top as wealthy high cost systems run the table and buy up Park Place, Boardwalk and every other valuable asset on the Board and in doing so export their high prices further and further. It appears this will not be stopped by the reform measures being contemplated. I guess I don’t think it’s fair to lump all physicians in one category in a state that is a classic tale of two cities.

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