Convalescent Thoughts

By Barry B. Sheppard, M.D.

As I sat on my convalescent couch the other day, I found myself staring at a very thick stack of missives from my health insurance company. These documents arrive almost daily to keep me up to date as to how each submission for payment is being handled. A pile of mail equally as tall contains all the bills I have received for medical care. It occurred to me that the impressive height of those stacks is a testament to the labyrinthine complexity of reimbursement of medical care providers inherent in the American health care system today. Upon closer inspection I discovered that the sheaf of claims actually yielded significant insights into much of what is wrong with managed health care in the United States.

The first wave of documents mailed to me contained several denials of reimbursement to various providers allegedly the result of incomplete billing details and incorrect diagnosis codes on claims they had submitted. Since the claims forwarded to me lack much of the procedural details and omit the CPT codes altogether, I am not sure whether the denials are valid or whether they represent further examples of the delaying tactics found to be routinely used by the major insurers involved in the ongoing RICO lawsuit in Miami.

Later mailings reflect claims partially reimbursed by my insurance plan minus amounts determined to be my responsibility as co-pays and my deductible amount. These claims are additionally debited by amounts termed “patient savings,” which are billed amounts in excess of that allowed for participating providers and by that determination become write-offs that I, the patient, can ignore. Claims submitted to my insurer that exceed the “allowed expense for a nonparticipating provider,” however, are touted to be my responsibility. I am left with the nagging question of how a payer determines the amount of “allowed expense” for providers with whom it has no contract.

I, myself, have submitted a claim for reimbursement for transportation home from a hospital in Rome. Although my coverage specifically states my insurer will cover 70 percent of ambulance costs, air ambulance costs, and foreign medical costs, a determination was made by some faceless bureaucrat that this is an uncovered expense. I am aware that what frequently serves as air ambulance service for transport across the Atlantic is two rows of reserved seats on a commercial jet with an attendant critical-care nurse. Had I gone that very expensive route, I am sure the question of coverage would not be an issue. My Italian surgeons had initially pressed for a nurse escort, but I convinced them that I could serve as my own medical escort to limit expenses and simplify transport. I had not figured on being financially punished for that cost-cutting decision.

It is exactly as stated by Barlett and Steele in their book Critical Condition “…bureaucracy will only grow. In an effort to extract their own profits from health care delivery, insurers will do everything they can to hold down their costs by delaying, reducing, or denying claims filed by doctors and hospitals. That in turn compels physicians and hospitals to work even harder to obtain reimbursements. (A) NEJM study estimated that physicians administrative costs were $72.6 billion in 1999— or 27 percent of their gross income.” 1

Private insurance in the United States today is built on a bewilderingly complex system of plans and third-party payers that necessitates an ever-expanding bureaucracy to administer, much of which is geared at denying claims. Estimates of the cost of administering such a system range as high as one out of every three health care dollars. A study by Mathematica Policy Research Inc. concluded that administrative costs of private insurers in the state of Maine ranged from 12 percent to 30 percent. Scared of a single-payer system? Medicare’s overhead averages 2 percent a year. The savings experienced by dissolving the vast administrative machine amassed by the American health care system could be put toward actual medical care of patients. Between 1969 and 1999 the portion of the U.S. health care labor force represented by administrative workers grew from 18.2 percent to 27.3 percent. In Canada, where government is the single payer, the increase was 3.1percent. The writing may be on the wall; a nonpartisan think tank in Washington, D.C., noted a marked shift in opinion in its 2004 poll with a notable lack of resistance to government involvement among groups traditionally opposed to such an idea. 2 

1.  Barlett DL, and Steele JB. Critical Condition: How Health Care in America Became Big Business and Bad Medicine. New York, Doubleday, 2004. P 172.

2.  Barlett DL, and Steele JB. Critical Condition: How Health Care in America Became Big Business and Bad Medicine. New York, Doubleday, 2004. P 170-1.