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How to Fix Healthcare

4/18/2016 4:44 PM

How To Cut 1/3 From the Cost of Healthcare

Without affecting payment amounts to facilities or providers at all.

This page is going to briefly demonstrate a way to accomplish the following:

The current state of affairs

Insurance

Insurance companies don’t make a product, they provide a service. The service is to provide their clients with a collective fund from which to pay for the population’s health care. In other words, clients pay into a large fund and the managers of the large fund pay for the individual’s healthcare. Insurance seems fairly simple, so why is it so expensive? Netflix provides a service which is similar to insurance: they take a pool of money from their clients, use that money to purchase the rights to television, movies and even original programming and charge about $10 per month. They accept search requests from users, they display a list of movies and shows that match that request, and then they deliver the movie or show digitally. They keep track of what episode or movie you have seen, what you want to see and how much you have watched. In a nutshell, they manage data. Insurance may be a little more complicated, but not as much as you would think. When you, as a patient, visit your doctor, several things happen. The doctor or nurse practitioner makes notes, written, dictated or otherwise. These notes go to a coder who translates them into ICD-10 (International Classification of Disease) codes that are transmitted to the patient’s insurance company. The insurance company then checks the codes against the patient’s particular policy, and pays (or rejects) the claim. If rejected, the coder recodes the claim and negotiations ensue until a suitable code is found. Otherwise, you, as the patient take over these negotiations, wasting your time, the practice’s time and the insurance company’s time. Usually, a rejected claim is simply paid by the patient.

Why we need change

The insurance companies have no way to inform doctors, nurse practitioners and caregivers what procedures they will actually pay for, nor the amount they will pay on any given policy. Further, not only is there no way to get this information without actually making a claim, we have to have a medical coder to even ask if they will pay for services already delivered. In the example above, if Netflix ran its business that way, we’d need a highly trained, highly paid individual to search for our movies before we could even see if they were available.

The Solution

From the above descriptions, it looks like Netflix is doing it right and insurance companies are doing unnecessary work and charging outrageous amounts for it. What we need is an insurance company that realizes that they are only managing data, like Netflix does.

Eliminate Paper

In most practices (and every one I’ve been to) the first thing you do even AS you are being greeted is to be handed a clipboard with a sheaf of papers that you fill out, with this same information over and over. You probably write your name, address, phone number a social half a dozen times. As tedious as that process is, someone at that practice has to come in and key it into their Electronic Medical Records Management System (EMR). This monumental waste of effort (anecdotally) is costing between $25 and $35 per patient per visit. That may not seem like a lot until you think about all the patients in all the practices in the entire country, it adds up. Let’s also think about the amount of time that the practice is going to spend looking for the pieces of paper you filled out last time. Let’s also consider the time you personally spend filling out the same information, over and over. Let’s put the cost of that at a proprietary 10% of the cost of your average visit. Our new insurance company would have to eliminate all paper, and publish the necessary things in an internet application for the patient to fill out once ahead of time.

Medical Coding

The first thing this new breed of insurance company is going to accomplish is to provide a set of procedure codes suitable for both documenting the patient encounter and paying the claim. While ICD-10 is great improvement over ICD-9, neither was ever intended to do what they are being asked to do. Luckily, the National Institutes of Health (NIH) provides a rich set of codes designed to do exactly that. It is called the Systematic Nomenclature of Medical Terms – Clinical Terms (SNOMED-CT). This is a database that is intended to code patient encounters in English, and we here at Sentia have made it easily searchable by category and corrected for spelling. This will eliminate the need for a medical coder and the associated costs of that medical coder. Let’s put that savings at an arbitrary 10%. That makes sense when we roll in the negotiation of what is covered and what isn’t.

Assign Dollar Values to SNOMED-CT Procedures

This is very straightforward. The designers of the SNOMED-CT have "crosswalk" information included in the database that loosely translates SNOMED-CT procedure codes down to ICD-10 codes so we will have a good place to start assigning dollar values to the SNOMED-CT procedures. There is no reason to do this work a second time.

Assign SNOMED-CT procedures to Policies

Once the dollar values are assigned, we can create insurance policies that mimic the procedures currently covered by the polices the old insurance companies provide now, according to government guidelines, simply substituting the more granular SNOMED-CT codes for ICD-10 codes. There is no reason to do this work a second time.

Price the New Policies

Pricing is the key in this new solution. We want our actuaries to come up with a Total Cost for a population and price the policy at that cost. We want no profit from this. We simply want to pay for medical services provided.

Provide a Free Portal

The new insurance company will provide an application that is suitable for both documenting the patient encounter and paying the claim with no other human intervention. Any medical practitioner will be invited to create a log in and use this application free of charge. Any patient that has insurance with our new insurance company will automatically have his or her particular policy information instantly available so the practitioner knows what is covered, what is not and how much the insurance pays. Let’s reiterate that. Practitioners See Coverage Before Service is Rendered. Once a diagnosis has been made, the practitioner can see exactly what the patient’s insurance covers. This eliminates not only the medical coder, but the negotiation between Practice Management (billing) and insurance. That means that the practice can be paid before the patient leaves the facility.

Provide a Free Patient Portal

One of the benefits of an internet based solution is the ability to give the patients themselves access to all medical records. If the patient is away from home and needs medical attention, they or a family member can give access to medical records including all services rendered, images, x-rays, growth charts and more.

Insurance as Data Management

Now that we have eliminated the inefficiencies, and priced our policies at true, dead cost, we can think about the business of insurance. Sentia can (and currently does for thousands of clients) manage the data for a nominal fee. We would be thrilled with $10 per user per month, comparable to say, a Netflix subscription. This Data Management fee would replace ALL the fees, charges, mishandling, inefficiencies and miscellany that insurance companies charge currently. The Affordable Care Act mandates a Medical Loss Ratio (MLR) provision of 80% payout ratio of premiums to healthcare providers. This is also known as the 80/20 rule. They are allowed to keep at least 20% (in many cases 25%) of the premium for overhead and profits.

Eliminating Inefficiency

Eliminating paper will save approximately 10% of the cost of healthcare. Eliminating medical coding and negotiating will net an approximate 10% reduction in cost alone. Seeing the payment process as data management and eliminating the overhead we will eliminate another 20%-25% of the cost of healthcare. That means that in lieu of a $10 monthly subscription to manage the data, this new insurance company can cut out a conservatively estimated 30%-35% from the cost of healthcare.

Total Savings

A patient currently paying $300 per month for health coverage would now be paying $210 per month ($200 plus the $10 subscription) with no other changes to the medical system. Further, if the pool of money used to actually pay for the care grows, this new insurance company can and will turn the excess back over to the policy holders. If you are paying $1200 for a family policy we will cut that down to $810. We earn the subscription fee and that is all we are interested in.

Health and Wellness

Included in the patient portal is a health and wellness program that is completely automated. The patient is prescribed patient education based on a lipid panel and either a blood glucose test or an A1c test and lifestyle questions. The main focus of chronic disease management is diet and exercise, and a ‘Body Age’ is calculated based on heart rate that is simple enough for everyone to understand. The lifestyle questions are geared toward causing people to think about the decisions they make and how they affect health and therefore the cost of everyone’s insurance. This information is available online and is detailed in the Individual Health Analysis provided to each patient.

Aggregate Reporting

Since we are already collecting medical data, we can instantly report on the health of a population. We can also report on the trend of the population based on their current and previous medical data. These reports are written and published currently and are in use by our clients. They are available to users who have sufficient privileges and contain no personally identifiable medical information. They can be used to compare the health of populations over time.

Integrating Historical Data

Importing legacy (and paper via scanned images) data into the new system will be paramount for existing patients. Sentia vends an integration tool that will easily and graphically move this data from its old repositories, whatever they are, to its new home. This data will then be available for the aggregate reports and for practitioners to access when making treatment decisions.

No cost Electronic Medical Records

The new insurance company’s EMR will be available to all. If a client does not purchase insurance through us, the practitioner can still sign up for, and use it free of charge. This should cut costs even further. An Epic or Cerner installation at even a medium sized hospital can run tens of millions of dollars and rarely gets fully implemented. The practitioner will still have to code the encounter for traditional insurance companies with ICD codes, but Sentia will agree to manage that data at no cost.

Considerations

Let’s look briefly at the risks associated with this new way of funding healthcare.

Security

Sentia identifies every session with a globally unique identifier that is never transmitted across the internet. This identifier is necessary to access the database in any way and is generated anew with every login. We are pioneers in security and have industry best in this and many other regards. Sentia is working with security professionals all over the country to help them secure medical and other forms of data.

Fraud

While it’s rare, fraud does happen. Daily, weekly and monthly Sentia can produce reports detailing which practitioners have dispensed a proprietary percentage more than the average of his or her peers. This report will include practitioners who ‘game’ the system by reporting false complexity to procedures (SNOMED-CT allows that) or who perform the same procedure multiple times on the same patient. You only have one spleen for example. This report will flag these practitioners to not be paid in the future or be sent to law enforcement for further investigation.

HMOs, PPOs and Indemnity

The current models are sufficient for the short term. We don’t want to introduce several large changes at once, so we would leave updates here for a later date.

Scalability

Sentia’s EMR is super lightweight and extremely scalable. The entire application can run on a desktop class machine. There will be no issues with maintaining a database of several hundred million. Even with the risks defined above, this new way of funding healthcare has far fewer risks than the way it is being funded now.

Conclusion



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