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It’s Not Just You: Many Americans Face Insurance Obstacles Over Medical Care and Bills
https://www.yahoo.com/news/not-just-many-americans-face-115755833.html
A majority of Americans with health insurance said they had encountered obstacles to coverage, including denied medical care, higher bills and a dearth of doctors in their plans, according to a new survey from KFF, a nonprofit health research group. As a result, some people delayed or skipped treatment.
Those who were most likely to need medical care — people who described themselves as in fair or poor health — reported more trouble; three-fourths of those receiving mental health treatment experienced problems.
“The consequences of care delayed and missed altogether because of the sheer complexity of the system are significant, especially for people who are sick,” said Drew Altman, the CEO of KFF, formerly known as the Kaiser Family Foundation.
The survey also underscored the persistent problem of affordability as people struggled to pay their share of health care costs. About 40% of those surveyed said they had delayed or gone without care in the last year because of the expense. People in fair or poor health were more than twice as likely to report problems with paying medical bills than those in better health, and Black adults were more likely than white adults to indicate they had trouble.
Why It Matters: Delayed care can endanger health.
Nearly half of those who encountered a problem with their insurance said they could not satisfactorily resolve it. Some could not obtain the care they had sought, while others said they paid more than expected. Among the nearly 60% who reported difficulty with their insurance coverage, 15% said their health had declined.
“This survey shows it’s not enough to just get a card in your pocket — the insurance has to work or it’s not exactly coverage,” said Karen Pollitz, the co-director for KFF’s patient and consumer protections program.
People have a hard time understanding their coverage and benefits, with 30% or more reporting difficulty figuring out what they will be required to pay for care or what exactly their insurance will cover.
“Insurances are way more complicated than they should be,” said Amanda Parente, a 19-year-old college student in Nashville, Tennessee, who is covered under her mother’s employer plan. She was surprised to find that her out-of-pocket costs spiked recently when she sought treatment for strep throat. While she realized her copayments would be higher, “I guess we didn’t know how drastic it was going to be,” she said.
Background: Insurance coverage is confusing to everyone.
Navigating the intricacies of coverage and benefits were similar regardless of what kind of insurance people had. At least half of those surveyed with private coverage, through an employer, those with an “Obamacare” plan, or a government program like Medicare or Medicaid, said they experienced difficulties.
People might be unhappy with their coverage because they were already concerned about higher inflation and potential layoffs, said Christopher Lis, the managing director of global health care intelligence at J.D. Power, which found that consumer satisfaction with insurers had declined in a recent study. “We’ve got economic conditions that set the stage for concern around coverage and benefits,” he said.
Insurers say people generally report being happy with their plan, and 81% of those surveyed by KFF gave their insurance high ratings. “Health insurance providers are committed to improving access, affordability and convenience for all Americans and will continue to find innovative solutions to work toward this common goal,” said David Allen, a spokesperson for AHIP, a trade group that represents insurers.
What’s Next: How to haggle with insurers or appeal?
Also striking among the survey’s findings was how unaware people were about pursuing appeals of denied coverage and how to go about doing so.
“Most people don’t know who to call,” Pollitz said. Sixty percent of insured adults surveyed did not know they had a legal right to appeal, and about three-fourths said they did not know which government agency to contact for help, particularly respondents with private insurance.
State insurance regulators oversee fully insured policies sold to individuals and small businesses, and the federal Department of Labor has jurisdiction over employer-sponsored insurance.
Many of the problems people have with their insurance could be solved by enforcing existing rules, like federal regulations requiring private insurers to issue understandable explanations of benefits and to maintain accurate, current lists of doctors and hospitals within their networks.
Quote of the Day: On Deadlines
Quote of the Day: On Leadership
UnitedHealth expects higher medical costs in Q2 as delayed care makes comeback
Dive Brief:
- Pent-up demand for delayed healthcare during the COVID-19 pandemic is pressuring medical costs for health insurers that had a financial windfall during the pandemic amid low utilization.
- UnitedHealth, the parent company of the largest private payer in the U.S., expects its medical loss ratio — the share of premiums spent on member’s healthcare costs — to be higher than previously expected in the second quarter of 2023, due to a surge in outpatient care utilization among seniors, CFO John Rex said Tuesday during Goldman Sachs’ investor conference.
- The news sent UnitedHealth’s stock down 7% in morning trade Wednesday, and affected other Medicare-focused health insurers as well. Humana, CVS and Centene — the three largest MA insurers by enrollee after UnitedHealth — dropped 13%, 6% and 8%, respectively.
Dive Insight:
The early days of COVID saw widespread halts in nonessential services, causing visits to plunge with an estimated one-third of U.S. adults delaying or foregoing medical care in the pandemic’s first year. By 2022, the sizable rebound in deferred care that many predicted had yet to materialize.
Instead, patient volumes increased, but didn’t return to normal levels, threatening the financial health of hospitals, which rely on utilization for revenue. However, the trend helped payers, which reaped some of their highest profits in history during the pandemic on low medical spend.
Now, early signs suggest utilization may again be increasing, with the cost of rebounding care coming around to hit payers. UnitedHealth now expects its MLR for the second quarter to reach or exceed its full-year target of 82.1% to 83.1%.
“As you look at a Q2, you would expect Q2 medical care ratio to be somewhere in the zone of probably the upper bound or moderately above the upper bound of our full-year outlook,” Rex said. “I would expect at this distance that the full year would probably settle in in the upper half of the existing range we set up.”
In comparison, the insurer reported an MLR of 82.2% in the first quarter of 2023. UnitedHealth’s MLR was 82% in 2022.
UnitedHealth said the MLR increase is because medical activity is normalizing after COVID kept seniors away from non-essential care.
“We’re seeing as behaviors kind of normalize across the country in a lot of different ways and mask mandates are dropped, especially in physician offices, we’re seeing that more seniors are just more comfortable accessing services for things that they might have pushed off a bit like knees and hips,” said Tim Noel, UnitedHealth’s chief executive for Medicare and retirement.
The Minnetonka, Minnesota-based insurer has seen strong outpatient demand through April, May and June, particularly in hips and knees with high volumes at its owned ambulatory surgical centers and within its Medicare business, executives said.
Inpatient volumes have remained consistent, and while outpatient utilization has increased, patient acuity has remained the same. Optum Health’s behavioral businesses are also seeing higher utilization in the second quarter, said Patrick Conway, CEO of Care Solutions at Optum, UnitedHealth’s health services division.
UnitedHealth doesn’t expect this higher activity to let up anytime soon. As a result, the payer incorporated higher outpatient utilization into its Medicare Advantage plan bids for 2024, which were placed in early June. The move attests to the longer duration of the trend, SVB Securities analyst Whit Mayo wrote in a note.
“Assuming it is going to end quickly wouldn’t be prudent on our part,” Rex said. “We’ll see how this progresses here.”
Physicians beyond ‘breaking point’ want Medicare pay reform
Physicians at the American Medical Association Annual Meeting called for an overhaul of the Medicare payment system, arguing that it is outdated and threatens the survival of independent practices and patients’ access to care.
“This cannot wait; we are past the breaking point. Congress must urgently address physician concerns about Medicare to account for inflation and the post-pandemic economic reality facing practices nationwide,” AMA President Jack Resneck Jr., MD, said in a June 12 news release. “Our patients are counting on us to deliver the message that access to health care is jeopardized by Medicare’s payment system. Being mad isn’t enough. We will develop a campaign — targeted and grass roots — that will drive home our message.”
Inflation, the pandemic, declining reimbursements and rising cost are making it more challenging for independent physicians to maintain their autonomy and are jeopardizing access to care, according to the AMA, which argues that CMS physician payments have declined 26 percent from 2001 to 2023 after accounting for inflation.
In January, the Medicare Payment Advisory Commission called for a physician payment update tied to the Medicare Economic Index for the first time, and, in April, a group of House members introduced a bill that would provide annual inflation updates to the Medicare fee schedule based on the index.
“Duct-taping the widening cracks of a dilapidated payment system has put us in this precarious situation,” Dr. Resneck said. “Physicians are united in our determination to build a solid foundation rather than further jury-rigging the system.”
‘It’s all about leverage’: The driving factor behind health system mergers
Many health system mergers today are “all about leverage” when negotiating with payers, rather than significant cost savings or increasing market share, Charlie Shields, CEO of Kansas City, Mo.-based University Health, told the Kansas City Business Journal.
Mr. Shields’ comments came after Kansas City-based St. Luke’s Health System and St. Louis-based BJC HealthCare signed a letter of intent to form an integrated academic health system.
The proposed merger is not about reducing costs — since the two systems have been part of a buying collective for a decade —- and is not about a rapid gain in market share, since St. Luke’s and BJC will largely stick to their respective areas, Mr. Shields told the Journal in a June 1 article. Instead, he argues, the merger, and similar ones like it, aims to leverage a better seat at the table when negotiating care rates with payers.
BJC and St. Luke’s operate the three top hospitals in Missouri, according to U.S. News & World Report. Together, they would pool $10 billion in revenue to serve more than 6 million residents across Missouri, Illinois and Kansas.
The transaction is expected to close by the end of 2023, pending regulatory review.
Is the Traditional Hospital Strategy Aging Out?
https://www.kaufmanhall.com/insights/thoughts-ken-kaufman/traditional-hospital-strategy-aging-out
On October 1, 1908, Ford produced the first Model T automobile. More than 60 years later, this affordable, mass produced, gasoline-powered car was still the top-selling automobile of all time. The Model T was geared to the broadest possible market, produced with the most efficient methods, and used the most modern technology—core elements of Ford’s business strategy and corporate DNA.
On April 25, 2018, almost 100 years later, Ford announced that it would stop making all U.S. internal-combustion sedans except the Mustang.
The world had changed. The Taurus, Fusion, and Fiesta were hardly exciting the imaginations of car-buyers. Ford no longer produced its U.S. cars efficiently enough to return a suitable profit. And the internal combustion technology was far from modern, with electronic vehicles widely seen as the future of automobiles.
Ford’s core strategy, and many of its accompanying products, had aged out. But not all was doom and gloom; Ford was doing big and profitable business in its line of pickups, SUVs, and -utility vehicles, led by the popular F-150.
It’s hard to imagine the level of strategic soul-searching and cultural angst that went into making the decision to stop producing the cars that had been the basis of Ford’s history. Yet, change was necessary for survival. At the time, Ford’s then-CEO Jim Hackett said, “We’re going to feed the healthy parts of our business and deal decisively with the areas that destroy value.”
So Ford took several bold steps designed to update—and in many ways upend—its strategy. The company got rid of large chunks of the portfolio that would not be relevant going forward, particularly internal combustion sedans. Ford also reorganized the company into separate divisions for electric and internal combustion vehicles. And Ford pivoted to the future by electrifying its fleet.
Ford did not fully abandon its existing strategies. Rather, it took what was relevant and successful, and added that to the future-focused pivot, placing the F-150 as the lead vehicle in its new electric fleet.
This need for strategic change happens to all large organizations. All organizations, including America’s hospitals and health systems, need to confront the fact that no strategic plan lasts forever.
Over the past 25-30 years, America’s hospitals and health systems based their strategies on the provision of a high-quality clinical care, largely in inpatient settings. Over time, physicians and clinics were brought into the fold to strengthen referral channels, but the strategic focus remained on driving volume to higher-acuity services.
More recently, the longstanding traditional patient-physician-referral relationship began to change. A smarter, internet-savvy, and self-interested patient population was looking for different aspects of service in different situations. In some cases, patients’ priority was convenience. In other cases, their priority was affordability. In other cases, patients began going to great lengths to find the best doctors for high-end care regardless of geographic location. In other cases, patients wanted care as close as their phone.
Around the country, hospitals and health systems have seen these environmental changes and adjusted their strategies, but for the most part only incrementally. The strategic focus remains centered on clinical quality delivered on campus, while convenience, access, value, affordability, efficiency, and many virtual innovations remain on the strategic periphery.
Health system leaders need to ask themselves whether their long-time, traditional strategy is beginning to age out. And if so, what is the “Ford strategy” for America’s health systems?
The questions asked and answered by Ford in the past five years are highly relevant to health system strategic planning at a time of changing demand, economic and clinical uncertainty, and rapid innovation. For example, as you view your organization in its entirety, what must be preserved from the existing structure and operations, and what operations, costs, and strategies must leave? And which competencies and capabilities must be woven into a going-forward structure?
America’s hospitals and health systems have an extremely long history—in some cases, longer than Ford’s. With that history comes a natural tendency to stick with deeply entrenched strategies. Now is the time for health systems to ask themselves, what is our Ford F150? And how do we “electrify” our strategic plan going forward?
America’s Hospitals Need a Makeover
A couple of months ago, I got a call from a CEO of a regional health system—a long-time client and one of the smartest and most committed executives I know. This health system lost tens of millions of dollars in fiscal year 2022 and the CEO told me that he had come to the conclusion that he could not solve a problem of this magnitude with the usual and traditional solutions. Pushing the pre-Covid managerial buttons was just not getting the job done.
This organization is fiercely independent. It has been very successful in almost every respect for many years. It has had an effective and stable board and management team over the past 30 to 40 years.
But when the CEO looked at the current situation—economic, social, financial, operational, clinical—he saw that everything has changed and he knew that his healthcare organization needed to change as well. The system would not be able to return to profitability just by doing the same things it would have done five years or 10 years ago. Instead of looking at a small number of factors and making incremental improvements, he wanted to look across the total enterprise all at once. And to look at all aspects of the enterprise with an eye toward organizational renovation.
I said, “So, you want a makeover.”
The CEO is right. In an environment unlike anything any of us have experienced, and in an industry of complex interdependencies, the only way to get back to financial equilibrium is to take a comprehensive, holistic view of our organizations and environments, and to be open to an outcome in which we do things very differently.
In other words, a makeover.
Consider just a few areas that the hospital makeover could and should address:
There’s the REVENUE SIDE: Getting paid for what you are doing and the severity of the patient you are treating—which requires a focus on clinical documentation improvement and core revenue cycle delivery—and looking for any material revenue diversification opportunities.
There is the relationship with payers: Involving a mix of growth, disruption, and optimization strategies to increase payments, grow share of wallet, or develop new revenue streams.
There’s the EXPENSE SIDE: Optimizing workforce performance, focusing on care management and patient throughput, rethinking the shared services infrastructure, and realizing opportunities for savings in administrative services, purchased services, and the supply chain. While these have been historic areas of focus, organizations must move from an episodic to a constant, ongoing approach.
There’s the BALANCE SHEET: Establishing a parallel balance sheet strategy that will create the bridge across the operational makeover by reconfiguring invested assets and capital structure, repositioning the real estate portfolio, and optimizing liquidity management and treasury operations.
There is NETWORK REDESIGN: Ensuring that the services offered across the network are delivered efficiently and that each market and asset is optimized; reducing redundancy, increasing quality, and improving financial performance.
There is a whole concept around PORTFOLIO OPTIMIZATION: Developing a deep understanding of how the various components of your business perform, and how to optimize, scale back, or partner to drive further value and operational performance.
Incrementalism is a long-held business approach in healthcare, and for good reason. Any prominent change has the potential to affect the health of communities and those changes must be considered carefully to ensure that any outcome of those changes is a positive one. Any ill-considered action could have unintended consequences for any of a hospital’s many constituencies.
But today, incrementalism is both unrealistic and insufficient.
Just for starters, healthcare executive teams must recognize that back-office expenses are having a significant and negative impact on the ability of hospitals to make a sufficient operating margin. And also, healthcare executive teams must further realize that the old concept of “all things to all people” is literally bringing parts of the hospital industry toward bankruptcy.
As I described in a previous blog post, healthcare comprises some of the most wicked problems in our society—problems that are complex, that have no clear solution, and for which a solution intended to fix one aspect of a problem may well make other aspects worse.
The very nature of wicked problems argues for the kind of comprehensive approach that the CEO of this organization is taking—not tackling one issue at a time in linear fashion but making a sophisticated assessment of multiple solutions and studying their potential interdependencies, interactions, and intertwined effects.
My colleague Eric Jordahl has noted that “reverting to a 2019 world is not going to happen, which means that restructuring is the only option. . . . Where we are is not sustainable and waiting for a reversion is a rapidly decaying option.”
The very nature of the socioeconomic environment makes doing nothing or taking an incremental approach untenable. It is clearly beyond time for the hospital industry makeover.
“Be careful what you wish for.”
https://mailchi.mp/3ed7bdd7f54b/the-weekly-gist-june-2-2023?e=d1e747d2d8
A recent chat with a former physician entrepreneur who recently sold his practice to a large health system highlighted the fact that “hospital-physician integration” can sometimes be a misnomer. “I feel like we were sold a bill of goods,” he told us, referring to his ten-person primary care group.
“We worked hard to build this practice, and the health system CEO made a lot of promises about the value of bringing us in, and the investments they’d make in our growth.” Instead, the group has experienced a different reality: little meaningful integration, an unclear bureaucracy to navigate, zero transparency into the finances of the medical group or system, leadership turnover, and a lack of strategic vision.
“We would never sign this deal again,” he said, “and we’re not the only ones—they might not realize it, but this system is on the precipice of a full-on physician mutiny.”
Of course, there are two sides to every story, but the anecdote reinforced in our minds the importance of careful planning and attention to integration following practice acquisitions. There needs to be a plan, it needs to be clear, and it needs to be resourced.
Otherwise, systems risk ending up with unhappy, disengaged doctors—a situation to be avoided at all costs.
HENRY KOTULA 