Health care overhaul promoted at LV forum

Michelle Swafford

Thursday, Jan. 29, 2004 | 11:09 a.m.

Big changes in the health care industry could offset escalating health care costs, but buyers and sellers of health care have been reluctant to consider new options, industry consultants say.

Advocates say an overhaul of health plans and administrative procedures could lead to more quality care and efficient systems.

A host of ideas were presented to health care financial managers this week during the Healthcare Financial Management Association Region 11 conference in Las Vegas. More than 500 people attended the conference. They were looking for ways to cut administrative costs and provide better service to customers.

The current national health care system needs an overhaul starting with the federal health programs Medicare and Medicaid, said John Kitzhaber, former Oregon governor and 13-year emergency room physician.

"We're not going to solve the problem by clinging to a system from the mid-20th century," he said.

Medicare and Medicaid are federal government programs established in 1965 to provide health benefits for people who meet certain criteria. Medicare provides health insurance for people age 65 or older and the disabled.

Medicaid provides health benefits to poor people with children who do not have other health coverage, leaving poor people who don't have children without coverage. When Medicaid funding gets low, the eligibility requirements shift to make fewer people eligible, Kitzhaber said.

Although shifting costs and dropping patients from health coverage are commonly used by government and private health plans to save money, this ends up costing society more in the long run, Kitzhaber said.

"Those without coverage still get care," he said. "They go to the emergency room. We are going to pay for these costs one way or another unless we say people can die on the ambulance ramp if they don't have insurance."

Federal law requires emergency rooms to treat any patient with an emergency regardless of their ability to pay.

"It's a social responsibility to provide some kind of safety net," he said. "We do it right now, but it's really expensive in human and economic terms."

Kitzhaber said an explicit health care policy needs to be established to bring the nation closer to providing universal coverage.

He recommended three tiers of full or partial publicly funded health coverage, which would be rationed based on benefits rather than people and would provide some coverage for the 44 million uninsured Americans.

The first tier would be a managed-care plan that would be open to anyone who could not afford coverage and would be based on financial need, not age or number of dependents. There would be a limited network of providers, but it would offer basic health coverage.

The second tier would be a community managed-care tier that would provide more provider choices and benefits for a higher premium paid by consumers.

The third tier would be self-directed and would enable patients to choose what benefits and providers they wanted in exchange for higher premiums.

Also, Steven Valentine, president of The Camden Group in California and a health care consultant, said insurance plans with higher deductibles and larger co-payments are likely to become more common in the current system.

Valentine said that under the current system, insurers are likely to scale back the number of products they offer to reduce administrative costs and a greater emphasis will be placed on quality of care, he said.

The Centers for Medicare and Medicaid Services is rewarding the top performing hospitals with bonus Medicare payments and some insurers are following suit, Valentine said.

Another way the health care industry is controlling costs is by processing more paperwork electronically.

The Health Insurance Portability and Accountability Act requires health plan providers to receive and pay claims electronically, but some companies are going beyond electronic claims to reduce administrative costs.

Between 19 percent and 24 percent of health care costs are administrative, said Jim Moynihan, a HIPAA consultant with McLure-Moynihan Inc.

Some hospitals and health plans have started enrolling patients and verifying health coverage electronically.

A Midwest health plan provider automated its insurance verification process, which reduced the number of denied claims by 50 percent, he said.

It also reduced the amount of staff time from 44 seconds per verification to eight seconds, he said.

The biggest problem is that many employers don't update who should be covered with insurers often enough, meaning both groups are paying for medical services for people who shouldn't be covered, Moynihan said.

AT&T saved about $15 million the first year it automated its health plan information because in the past, medical claims of former employees were being paid when they no longer worked for AT&T, he said.

Another benefit to electronic processing is that it enables health providers access to current deductible and co-payment information, which benefits providers and the patients, he said.