A HEALTH CARE PRIMER: Understanding Health Care Today

I have been working within our country's health care system for over thirty years from a "provider" prospective. I have had to work with and interface with private insurance carriers, Medicaid and Medicare. In the late 1980's, I worked for an organization chosen as one of five pilot sites in the country to test and evaluate new procedures for cost cutting on behalf of the Department of Defense. This five year project covered all military personnel and civilian employees. How military personnel and civilian employees of the Department of Defense receive their medical care today is a direct result of this five year demonstration project. These benefits do not apply to care received in a military hospital as a result of combat related illness or injury but more in terms of on-going care provided by private sector contract providers.

The first thing everyone needs to understand is all health care is managed by every insurance carrier in the country including all of the government entitlement programs and the Department of Defense. The standard practice is simply referred to as "Managed Care". Very straightforward and does exactly what you might expect from the title. I need to step back just briefly though and explain how health care was delivered prior to managed care. This is quite simple actually. All providers of health care, whether medical, dental, or mental health made their own decisions about the care of patients based on their personal experience and knowledge. Upon delivery of their chosen course of treatment, providers (or individuals) submitted payment claims to the insurance companies for reimbursement. This was a simple and straightforward process with the course of health care driven by the practitioner and the patient. As more and more people became enrolled in health insurance programs and the government established Medicaid and Medicare, the insurance carriers began to look for ways to contain costs and "manage patient care". In some respects managing patient care is misleading. It may be more appropriate to say managing the way providers practice. The first evolution in managed care (before it was ever referred to as such) came about under a program initially instituted for and limited to hospital services. The concept of "Diagnostic Related Groups" or DRG's was put into place. Again, a fairly simple concept once someone bothers to explain it. Simply put a DRG is a set of standard and acceptable procedures one may reasonably expect to be needed given any specific medical diagnosis. Every single procedure, any form of service delivery provided by a practitioner, is given a specific "procedure code".Within every diagnosis is a prescribed and accepted set of procedure codes for treating that specific diagnosis. As initially implemented in hospital services, care providers had to stick to the accepted set of procedure codes for the given diagnosis. Any procedures a practitioner would want to perform outside of the specified DRG required "prior approval". Failure to obtain prior approval for a procedure outside of the DRG meant the practitioner/hospital would not be paid for the procedure. Insurance carriers and the government have a panel of "experts"; RN's, physicians, specialists, etc. that review provider procedures and approve and disapprove any and all procedures outside of the DRG. In the spirit of clarity, it is important to note there is not a "national panel" that reviews all insurance programs. Instead, every insurance carrier including all of the government programs have their own set of experts that review and make determinations about the delivery of their insurer's health plan. This practice is commonly referred to as "Utilization Review" (UR). The development and implementation of DRG's in the medical field had a two-fold purpose: primarily to cut costs and manage cost increases of medical services and to establish an acceptable set of procedures for each diagnostic code bringing uniformity to the medical establishment. The later of these two does make sense. Practitioners have a road map to follow that is a standard of care if you will for each diagnosis.

From the world of DRG's grew the greater concept of Managed Care. Private insurance carriers began expanding the concept of DRG's from hospital services into the very offices and practices of individual providers. In essence the hospital based DRG system was expanded to individual providers in communities, laying out acceptable standard practices for health care providers as they delivered care to their patients during office visits. All private providers are required to comply with a set of standard procedure codes for specific patient concerns. As with the original hospital based DRG system, any procedure lying outside of the established codes for a specific diagnosis, requires prior authorization from the insureds health care insurance company. Without prior approval, the local provider is likely not going to be reimbursed and the burden of payment would then be the sole responsibility of the patient. This system also goes further than just specifying a set of standard procedures; in recent years it has expanded into including a prescribed set of drug treatments for any given diagnosis. The standard practice is to begin care with older, cheaper, even generic drug choices. Should these drugs prove ineffective, the practitioner may then, with prior approval, move up the drug chain if you will until an effective pharmaceutical intervention is found. Please do not be mislead by what you hear on daily news shows or rhetoric from politicians. Your health care has been managed for a very long time. This is really nothing new to providers of health care or insurance carriers. The system as currently structured can be extremely burdensome on providers and providers often have to take their valuable time to fight with insurance carriers to provide the level of care to their patients they deem to be the most efficacious. Medical providers spend a great deal of money employing qualified professionals to deal with insurance companies and to complete required Utilization Reviews; either telephonically or written correspondence. The system seems to pit provider against practitioner and the relationship between the two is more time than not adversarial. The cost of meeting the demands within this review system can be tremendous. Specialities are especially scrutinized and required to provide inordinate documentation to support their diagnosis as well as chosen course of treatment.

The bottom line of health care today is it is a Managed Care System which by the nature of the beast results in rationing by any other name. At some level determinations are made through the Utilization Review process of cost effectiveness. In other words, does the cost of care (treatment) out weigh the benefits? If the answer to this question is yes, the likelihood of receiving that level care is slim at best unless the patient chooses to pay for the care out of pocket or the practitioner chooses to provide that level of care pro bono. Though the development of established standards of care may be a positive outcome of DRG's and Managed Care, the cost associated have been astronomical. Keep in mind every health care insurance carrier including Medicaid, Medicare and the Department of Defense have regional Utilization Review panels that monitor and prescribe care by individual and/or organizational health care providers. As you might imagine, this is a huge and very costly bureaucracy. The costs of this bureaucracy are paid for by the premiums paid by individual and group consumers. You. On the provider side of health care, providers have been forced to employ individuals that do nothing other than interface with insurance carriers to conduct Utilization Reviews with the private insurance carriers and entitlement programs. Another layer of bueracary if you will but one paid for by the first line consumer in higher physician fees and overall medical costs. So a system initially intended to standardize medical care has grown to encompass a system of managed, rationed care with financial burdens passed on to the front line consumer from both directions. There are many opportunities for finding savings and cost cutting within the health care arena without further cuts or rationing for the consumer of health care. At the same time; insurance carriers and government entitlement programs have built huge bureaucracies that have become the "sacred cows" of the insurance industry and will not be easily sacrificed or cut to obtain decreases in health care costs.