Health Plans Are Dumb And Medicare May Be Getting Smarter

Last week I was actually on a beach for the first time since I retired in 2017 and two healthcare developments caught my eye.  I know, I know–I probably should have been thinking of alcoholic concoctions with little umbrellas and sunsets but I don’t drink and if you have seen one sunset you have seen them all.

The first development was a tired old story of stupidity on the part of a health insurance plan.  Once again a health plan had tried to renegotiate a contract with a provider and having failed to achieve its goals of vastly cutting reimbursement, terminated the agreement.  The result, hundreds if not thousands, of people will be forced to try to find new doctors.  This was probably not what their employers had in mind when they signed their contracts with the health plan.

Health plans don’t seem to get it.  As third-party intermediaries, they have become commodities with a limited purpose.  In an era where direct contracting will probably become the norm, the need for health plans as we currently know them is coming to an end. Every time you see a health plan put itself in this position, you are seeing its death throes.  Call it health plan suicide by stupidity.

In the particular case at hand, the health plan sent a letter to all the contracted doctors saying they had to sign an attached agreement if they wanted to continue to see their patients, not realizing the doctors were part of the healthcare system with whom they had just terminated the agreement.  The entry bar to management in health plans is clearly low and getting lower.

This is just one more example of large health plans not really knowing the local markets where they are marketing their product.  The corporate empty suits don’t understand that brute force does not work anymore.  As long as they think they are going to make their bonus numbers, they will make stupid short-term decisions.

People really could care less about the name on their health plan as long as they can access their physician of choice and to a sightly lesser extent their hospital of choice.  That is the reality facing health plans and that is why you are seeing strange mergers like drug store companies (also an endangered specie) and health plans coming together to seek a synergy which does not exist.  Are they drug stores with a plan or health plans on drugs?

More to the point, in an era where waits to see primary care physicians and specialists are  long, a threat to physicians to take away patients is not very viable.  Access to primary care doctors is becoming a real problem.  Health plans, always with one eye on Wall Street, don’t really care about patients who become pawns in their silly game.

Add to this the fact that many hospitals run full most of the time and the threat of health plans to take patients elsewhere becomes even sillier.  Integrated healthcare systems were developed so that care could be coordinated and better outcomes realized.  Health plans often get in the way of better care with their disruptive behavior.

The answer to all this which is slowly but surely evolving is the development of nonprofit health plans which are part, not apart, of integrated healthcare systems. Only then will the twin goals of better quality and better cost control be achieved.  In the meantime, watch the existing health plans cut their own throats.

The other development which caught my eye on the beach was the announcement by Medicare of yet more pilot programs to further their goal of “value-based purchasing”, another way of saying rewarding and punishing providers if they don’t meet certain, ever-changing and poorly defined quality goals. Medicare’s previous pilot programs in this regard have been failures although the pundits try to hide that fact.

Two of the new proposals by Medicare would compensate primary care physicians on a  monthly basis per patient.  The two proposals differ by the degree of risk assumed by the physicians.

At first glance, this sounds like capitation in a fancier dress.  A closer look, though, shows it may be more like a subscription model which is gaining favor in other areas of the digital economy.  Even now, you can “subscribe” to a car or have an Amazon Prime subscription. If this is the case, and Medicare can resist its natural impulse to make something simple more complicated than it needs to be, it may be on to something.

There are lots of details yet to come about Medicare’s proposals but at least they deserve credit for thinking differently as they also try to meet the twin goals of better care and cost containment.  Health plans might think about this as they slowly kill themselves.

Health plans are dumb and Medicare may be getting smarter.


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