While there is ongoing debate over whether The Patient Protection and Affordable Care Act can mandate that every American must purchase health insurance, just about everyone from insurers to employers to health care providers to patients can agree that the health care system in the U.S. needs major reform.
Fortunately, reform is already underway. Even if the Supreme Court declares the insurance mandate unconstitutional, the times – they are a-changing. Our traditional one-size-fits-all manner of delivering health care and fee-for-service model of paying for it just isn’t getting the job done anymore.
The new concept for reform is called value-based insurance design (VBID). VBID seeks to remove barriers to quality care, such as paying high fees for doctor visits or prescription drugs. As for payment, VBID pays a bundled fee to the provider based on the health outcome of the patient, not for each individual service rendered to achieve it. Thus, patients receive top quality care at a lower price. Ideally, if the care is appropriate and effective the first time, cost savings are realized when there are no repeat visits or ongoing care expenses.
[CLICK HERE to read the article, "Health reform at 2: Why American health care will never be the same," at msnbc.com, March 24, 2012.]
The first goal of the VBID concept is to improve health outcomes for patients, while the secondary goal is to reduce the cost of providing that medical care. Even before health reform legislation was passed, the health-care industry was moving toward a more value-based system. But the Patient Protection and Affordable Care Act (PPACA) has played an important role in advancing the VBID concept by soliciting volunteers to be paid via bundled fees, creating certain related mandates, and spurring a flurry of innovative programs currently being tested for their effectiveness.
Another aspect of the VBID strategy is to cut costs by discouraging doctors from ordering tests and treatments that are either unnecessary or low-value relative to the health outcome of patients. It is believed that the volume of unnecessary services constitutes about 30% of health care expenditures.1
1 [CLICK HERE to view the video news story, "U.S. Health Care: The Good News," at PBS.org, February 2012.]
In the spirit of cutting costs and health care reform, nine medical societies representing approximately 375,000 physicians have published tests and treatments they believe should no longer be automatically ordered for patients. A sampling of these services is listed below; you can check the full lists at www.choosingwisely.org.
· Repeat colonoscopies within 10 years of a first test
· Early imaging for most back pain
· Brain scans for patients who fainted but didn’t have seizures
· Antibiotics for mild- to-moderate sinusitis unless symptoms worsen or last for seven or more days
· Bone scan screening for osteoporosis in women younger than 65 or men younger than 70 with no risk factors
[CLICK HERE to read the article, "Are You Choosing Tests Wisely?" at Medscape Today, May 16, 2012.]
Medical Loss Ratio
The industry term “medical loss ratio” refers to how much of your premium dollar is considered a loss to the insurance company because it must be used to pay your medical benefits. The rest of your premium goes to the insurance company’s “overhead.” Industry experts project that “overhead” amounts represent approximately 25 to 30 percent of the nation’s expenditures on health care.2
However, thanks PPACA, starting in 2011 insurance companies were required to reduce their overhead in order to lower the premiums charged to consumers. The companies that did not meet their overhead target are now required to compensate their members via a rebate. The Kaiser Family Foundation estimates that $1.3 billion will be rebated to both employers and consumers this year.2
2 [CLICK HERE to read the article, "What is a Medical Loss Ratio?" at Forbes.com, May 15, 2012.]
It seems that if we scaled back unnecessary care and “overhead” charges by insurers, we could save up to 60% on health care costs as a nation. Which is kind of what we do in our own lives when we need to tighten the belt – lower our “overhead” and cut out any unnecessary expenses.
Please give us a call if you could use some help reviewing your insurance and/or financial situation to help trim the fat and save money.