Valley View Blog

The Consumer Revolts

This morning I had a discussion with a local small businessperson who was absolutely disgusted with the manner in which his current medical carrier pays claims.

As you read that lead-in sentence you are probably thinking to yourself…Well, who isn’t disgusted? They never pay enough or fast enough, they charge too much premium, etc… etc…

However, his disgust is not with the fact that the carrier doesn’t pay enough for claims, or charges too much premium but rather the negotiated discounts between the carrier and the providers are too small to ensure the stability of the premium in the first place…in other words, they pay too much!

In a typical PPO or HMO/POS setting, the carrier and the provider panel have pre-negotiated fees for each and every service available from the facility or doctor. Those pre-negotiated fees are ostensibly lower than the “street cost” or the amount you would pay without insurance, and again ostensibly should serve to increase the chances for rate stability. But is this always the case?

In the instance of the businessperson referenced above: after receiving care at a local hospitals’ emergency room he was shocked to receive an Explanation of Benefits from his carrier which indicated that the discount for service through his insurance carrier was less than 20%. In this case the issue is cogent to the consumer because the plan is a High Deductible Health Plan and the insured pays a large deductible prior to the carrier paying any claims. His frustration stems from the fact that he pays his premium and, by and large, it appears he gets very little for it. His deductible is high, so in a typical year he finances most, if not all, of the claims himself. His premium certainly is kept lower with the high deductible and buys him the security of coverage in the case of a large or catastrophic claim. What he is not receiving is the preferred pricing (discount) he feels that his premium should be supplying…and it’s difficult to fault him for feeling that way.

This insured has discovered that if he walks into a provider and asks for a cash discount, in some (more and more) cases he will be charged less (sometimes much less) than the negotiated fee from the carrier. This would seem to be a counterintuitive circumstance until we examine the real extenuating issue here: the cost inherent with submitting a claim to an insurance company. In all cases a good deal of the provider’s overhead goes to administration (submission) of claims. Certainly in fairness a large portion of the carrier’s overhead also goes to administration (payment) of claims.

For the Consumer, however, it seems that expectations are changing…for the better. Not only are we as consumers expecting our medical insurers to pay claims on time and accurately but we also are requiring them to do the best job possible to get the lowest claims cost possible.

I have seen it written that this Health Care Reform we are experiencing currently is not reform at all but rather nothing more than a change in payer (shifting from private to government).

If that is the case, and I believe it is indeed, then true reform can only be achieved by a cooperative effort between all the concerned parties: consumers, insurance carriers, medical providers and government entities.

The first step is for the consumer to step up and demand the best effort from the carrier to negotiate the most cost-efficient contracts possible. Then the carriers and providers must work together to streamline the administration process on both ends.

True health care reform cannot be instantly created by legislation, it rather will take a concerted cooperative effort and it will take time, and we had best get going now because time is running out.

If you have questions regarding how you and or your employees can make an impact as consumers please contact your VIA Benefits representative.

David Brand writes bi-weekly in his Benefits Blogged column. He can be contacted via email at dbrand@viainsurance.com.