Introduction

Health insurance networks are supposed to be a money saving coalition of insurance and medicine to provide quality medical care to patients at an affordable price. Today, we are going to discuss whether this is the case, or whether the network is designed to separate the patient and practitioner from as much money as possible while maximizing profits for the insurance company.

Supposed Benefits of Networks

Let’s take a look at exactly what we mean when we talk about a network and how it all fits together.

Cashless Process

Network hospitals and practices have established procedures in place to facilitate cashless treatment, allowing policyholders to receive medical care without the need to pay upfront and later seek reimbursement.

Improved Quality

Network Practitioners are vetted through the negotiation process and ostensibly provide better care.

Cost Effectiveness

Rates are negotiated beforehand to insure that everyone is adequately represented and that all interests are being served in a fair and balanced system.

Seamless Claim Settlement

The patient never even needs to know that the payment is happening. With the negotiated rates and contracted payments, the practitioner ‘codes’ the patient encounter and submits it for payment to the payer. Payment is then issued with a minimum of red tape and finished quickly.

Wide Network Coverage

Payers, or health insurance companies, include as many practices as possible in their networks to insure choice and convenience for their insured clients.

The Problem

Payers don’t return any of these ‘benefits’ outlined previously. The sole purpose of insurance networks is to make healthcare as difficult to obtain as possible and to fleece as much money from both the patient and the practitioner without resorting to robbing them at gunpoint. Since there are no policies left that don’t have some kind of deductible or coinsurance, or co-pay, the cashless argument just doesn't hold water. The patient must pay for the part of his or her care out of pocket, that means cash, that isn’t covered by insurance. There is no ‘improved quality’ the payer doesn't care if you are seeing Dr. Death, and as long as his claims are in order and he doesn't complain about denials and delays. Sending armies of attorneys to hundreds of thousands of practices every year to negotiate rates is not cost effective. The entire point of this cadre of lawyers is to beat a practice into submissions to provide care at the lowest price possible, not to save patients money, but to maximize profits for payers. Seamless claim settlement might be the best argument for networks here, if only the payers actually paid claims. Some of these payers just deny payment in 1 out of 3 cases, and for no good reason. It is incumbent on the practice and the patient to then file appeal after appeal that gets ignored, lost, or flat denied.

To recap, insurance networks are designed and developed to make the payment process as difficult as possible by limiting the number of practitioners a patient can see, and increases costs by sending thousands of lawyers to negotiate rates. These things, along with denying coverage take enormous resources, expensive resources, that the patient pays for and the only outcome is a society that is not receiving coverage and the treatments they need. If they are lucky enough to get an approved claim it is for at least double the appropriate cost.

The Solution

The solution, of course, is to put health insurance companies, with their silly networks, out of business, and we are going to show you how, right here and right now. First, you don't want greedy, profit-above-everything business people in charge of your healthcare. The Commonwealth Fund identified several problems in their paper “U.S. Health Care from a Global Perspective, 2022: Accelerating Spending, Worsening Outcomes” That basically boiled down to two problems:

Health insurance is too expensive
Patient education is largely ignored

When we address these two problems, we fix the US healthcare system.

The Concept

Health insurance companies have two inputs: a patient and a procedure, and one output: a check to the practice for the procedure performed. That is it. If we automate the process between the input and the output, then we have eliminated everything the insurance company does. The only other thing we will address is the way to educate and incentivize the patient on how to live a healthy lifestyle. That would result in fewer claims, causing reduced rates for everyone.

The Execution

We at Sentia have designed and developed a solution that completely automates health insurance. We provide the Electronic Medical Records (EMR) system to the practice, and when they document a patient encounter, we pull out the procedures performed and pay for them in real time. There are no networks, no adjudication, no denials, no medical coding, no big buildings, no people and most importantly, little to no cost once the system is built. For this service we charge $10 per month plus the actual cost of the risk. Remember that according to iii.org, your health insurance company only returns 53% of your premiums as benefits. We can return the 47% they waste to the patient, in lieu of the previously stated $10 per month, plus the actual cost of the risk. There are other efficiencies we will explain, and a way to manage chronic, behavior-based disease.

Patient Education

Also remember that treatment for chronic, behavior based disease consumes 84%, or $3.7 trillion, of the $4.4 trillion spent on healthcare each year in the US. The average of avoidable deaths per 100,000 in OECD countries is 225. In the US it is 335, or about 1/3 higher. If we could bring the US average down to the OECD average, we would save about $1.2 trillion. That is a further reduction in costs of about a quarter.

How do we do this? We offer financial incentives for people who live a healthier lifestyle as measured by our built-in health and wellness system. This system takes into account measurements taken at the primary care physician’s practice, like height, weight and blood pressure, plus things screened for in blood work. Additionally, there is a mental health screening right in the wellness package. This system looks at all these factors and then prescribes patient education based on the results. At Sentia, this is part of the system. We can tell when the patient opened the patient education and how long they spent reading it, and offer a small discount for simply doing so. A larger discount is offered for reading and following the education, as evidenced by better results in the patient’s health assessment.

The Finances

Let’s look at big round numbers. Let’s say we can save the patient about 40% on their health insurance up front. Let’s say that we save the people of the US another 25% by being educated about healthy living and getting to the average OECD deaths per 100,000. We know that eliminating medical coding, providing a free EMR to the practice and putting compliance and efficacy reporting into that system will save each and every practitioner an additional $77,000 per year that they currently spend. That, however, is only about 2% of the total, so we’ll just ignore it. If we total all that up, we see more than 60% savings. That means that we would have not only the best healthcare on the planet but also the cheapest.

Conclusion

We have shown a way to save more than 60% from the cost of health insurance and have addressed both of The Commonwealth Fund’s two conclusions about health insurance in the US: cost and education. We have all of this written and deployed in a prototype application. The only thing we really need to get this all started is to clean up that application and turn it into an enterprise application with logging, administration and redundancies in hardware. We will need funding, probably about $100 million over the first two years, like other startup health insurance companies. For comparison, United Healthcare had revenue of $371.6 billion and net earnings of $22.3 billion. With about 60% savings we should service and retain 90% or more of the 300 million insured people in the US. That gives us a revenue of $36 billion, however, everything in our system is automated so that is a $32.4 billion profit at a 90% profit margin.

This figure shows that this is a viable business proposition.

We have shown a way to make patients healthier by educating them on the consequences of their behavior, and a way to capitalize on that to the sum of $1.2 trillion or about 25%. If we add that to the process automation savings of our solution, we are in the ballpark of more than 60% savings in total. We already have the best doctors and the best equipment; we just need to implement the above detailed framework to give them all the tools necessary for success.

We have this system in prototype now, fully functioning.

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We have built a comprehensive health information system to keep the patient healthy and on the right track with the ability to incentivize healthy living. Implementing this system should be fairly simple and will completely revolutionize the way healthcare is paid for, saving countless lives. We have shown a way to use this system to make the best healthcare system in the world also the most efficacious and the most affordable, and a way to move toward value-based care.

Health Insurance Networks: Cost Saving, or Money-Grubbing?

2/3/2025 12:00 AM