A few months back this story caught my eye: Insurers, hospitals clash over help paying ACA plan premiums. It describes an issue where insurers believe that hospitals are steering patients who are eligible for Medicaid or Medicare to private plans by subsidizing their premiums through charitable organizations. On the surface, that actually sounds like a nice thing to do. They’re helping needy patients get more comprehensive coverage with lower co-pays. Way to go! The problem, as AHIP describes it in this letter to CMS, is that the real reason they’re doing this is to drive higher reimbursements for expensive procedures like kidney dialysis for End Stage Renal Disease (ESRD) patients.
I’ve been thinking about this ever since and it just came up again as the nation’s two largest dialysis chains received subpoenas from the Justice Department for information about their relationship to a charity that provides premium assistance. The theory is that these guys are funding a charity and that charity is then favoring their patients to receive the assistance. The insurance plan “upgrade” would increase reimbursements up to 4-times the amount that would be paid under Medicaid (up to $200K/patient/year).
The hospitals and charities deny any wrong-doing and claim that they’re just helping the poor. Sure they may benefit from helping the poor, but that’s not their fault, they say. The insurers believe this is flat out greed and they lay out their case in the appendix of the aforementioned letter to CMS.
I don’t know who’s right, but that’s not why I decided to talk about this today. I’m writing about it because I think it perfectly exemplifies the challenges we face every day as we try to “transform” healthcare. There are a million little incentives that drive everyone’s behavior. Many of them are directly in conflict with one another. Most of them are below the surface and escape our detection altogether.
The basic problem is that we have a schizophrenic view of healthcare – it’s a free market driven by capitalistic goals on one hand and a centralized, government price-controlled market on the other. The charitable premium issue is an example of what happens when those two personalities collide. Medicare holds prices down to protect the taxpayer, but lets prices grow uncontrollably in the private market at the expense of that same taxpayer. That makes Medicare/Medicaid patients less desirable to providers thinking in business terms. That incentivizes them to find ways to obtain that case mix. I’m not saying it’s right, but it certainly makes sense.
So what’s my point? In a nutshell, it’s that this stuff is really hard. In the coming weeks, you’re going to hear all kinds of powerful rhetoric about why Obamacare is the best and needs to stay and then why it’s the worst and needs to go. Well, guess what… they’re both right and they’re both wrong. It all depends on which lens you look at it from. Which set of factors you’re examining relative to the issue at hand. In the end, my message is this: Don’t just believe the people on your team and dismiss those on the other side. Take every argument with a grain of salt and try to understand the underlying incentives that are driving people to say, do, believe what they do. This is a tremendous opportunity for us all to learn more about how the system actually works so that we’re best situated to help it along on the other side.