Dyscoordinated: Healthcare's Line Item Problem

19 Dec Dyscoordinated: Healthcare's Line Item Problem

Dyscoordinated (dĭs-kō-ôrdn-ātĭd) n.

  1. To purposefully prevent harmoniously working together
  2. To purposefully prevent pleasing combinations; or matches of form and function
  3. To purposefully prevent harmony of common actions or efforts

In addition to doing a little Health 2.0 Experiment in my last post, I have to followup with the actual delivery and payment of the service as well. I am really focused now on these two areas, particularly as they relate to the creation of Health Plan 2.0. The simple outpatient procedure that my son had done, performed at a well respected surgery center, was instructive of how far we have to go and how much opportunity exists to redefine how health care is actually consumed.

First, I showed up at 6AM to sign in as a patient. Fortunately, my wife had called ahead of time (should have been able to do this online) to help provide some basic insurance information (should be able to do with a swipe of my personal identification). After signing in, we took a seat and were called up a minute later to review the billing information. The office manager happened to be checking in patients that day and she dove immediately into her shpeal about signing your obligation to pay, informing me that I was going to get multiple separate statements from multiple separate providers, and essentially wishing me the very best in trying to figure it all out.


Figure 1. Actual form I signed regarding payment for services.

At this point, I stopped her and informed her that I wanted to actually read the materials. I asked her why, for such a simple and well defined procedure (less than 10 minutes in OR), the surgery center didn’t provide me with a single bill? She tried some blow off answer about physician tax ID’s being different. I called her out on it and said that tax-ID’s are bundled all the time for other types of health care services and that I know of several organizations that provide a single episode of care charge for care they deliver. She tried twice more with weak answers, which I patiently and politely challenged.

Finally, she picked up that I wasn’t going to be satiated with the usual fare. I next asked her if she knew of any health insurance companies that provide this simple but highly valuable bill aggregation service or that paid by episode of care. She stated she was unaware of any plans doing this (remember, this is a lady with 30+ years billing experience) but that as an administrator it would make her life dramatically easier. I went onto explain to her that a new health plan is going to be introduced (the Health Plan 2.0 concept I am working on) that would be responsible for creating a new type of health care market. She asked where she could sign up.

I believe that the next iteration of health plans will have to work much harder to earn my business, not only by the simple value added services they provide, but that they are driving important health care marketplace reforms such as the ability to purchase health care at the medical condition level and in discrete episodes, or units, of care. Line item billing (defined in this context as discoordinated care delivery and billing by providers) will only be a bad memory in the next iteration.

The cultural and financial impact of line item billing in healthcare, where individual providers create individual bills disconnected from each other, continues to be a primary driver of the ongoing spiral (up or down depending on your perspective) of our health care “system“. The way healthcare is financed does NOT promote a system, but rather a discoordinated group of individual actors doing their individual thing with total disregard for the patient and zero accountability for outcomes. How did this sorry state of affairs happen? Follow the money: 9,000+ billing codes for doing “things” – ZERO codes for achieving an outcome! Coordinated, efficient, and evidence based care is not financially healthy way to practice medicine.

But it can, and will, and has to get better.

Let’s start by simply demanding that we create a health care marketplace wherein we buy episodes of care at the medical condition level. A hip surgery. Complete evaluation for headache. A comprehensive genetic screening with consultation. 12 months of diabetes care, asthma, or CHF care. Discrete medical conditions with a definable set of care which would encompass all the different providers, care coordination, CPT / ICD-9 compilation, and aggregated single bill for the overall “care package”. This concept of paying for health care services by discrete episodes of care at the medical condition level, or purchasing so called “care packages“, could yield some pretty interesting results:

1. Standardized Care Packages. First, medical science and evidence based guidelines could serve as the standard in creating the specifications of what is included in a standardized care package for a specific condition. Purchasing an asthma care package would entail a know set of clinical activities that would provide optimal care for that medical condition. The care package specification process is important baseline as it allows the creation of side by side comparisons between different groups of providers who self aggregate to provide the service.

2. Provider Self-Organization. This second point is interesting, no longer do payers have to be the ones to aggregate to provide the set of services. Providers would self organize, much like they structurally do in a vertically integrated care delivery system (Kaiser, Mayo, VA, etc), but now this could/would happen in a virtually integrated care system (more on this in another post). Different providers could choose their own care team to provide the specific set of care package components. All this negotiation and magic would happen on the back end and be as transparent to the consumer as all the negotiation, manufacturing, and magic that happens in producing any other finished consumer product (do you care how Vizio assembles all its parts from all its providers or do you just care that you got a totally flossy 50” big screen for a great price?).

3. Market Comparison. The standardized care packages, and the providers who deliver them, would also be able to be compared in a virtual marketplace. This marketplace would not only feature price as a comparison point, but multiple other features that are relevant to consumers. Like patient outcomes, five year survival rates, quality of life improvements, patient satisfaction, and other relevant consumer metrics. This would be a much different experience than what I had recently when trying to piece together this information on my own. The internet infrastructure to do this exists, but the capability for this level of data fluidity does not.

The key point with all this is that the dysfunctionated (discoordinated + dysfunctional) care delivery processes can be modified, often dramatically, but appropriately aligning financial incentives. Healthcare providers currently bill line item by line item because that is how they get paid. Do more, get paid more. Who cares if the patient gets 30 bills as long as mine gets paid. There is no incentive to add value to me as a patient by simply aggregating my bill or even aggregating my care by episode. However, if providers were getting paid to deliver outcomes that required coordinated care among a team of providers, I believe strongly they would respond with more efficient, more effective, and higher quality care. Furthermore, as consumers get experience purchasing care in this way in a true health care marketplace, I can’t imaging they will ever consider purchasing it in any other way.

The concept of care packages as a reform instrument is being kicked off in Minneapolis, MN by a Lemhi backed startup called Carol. It is a vanguard concept that requires significant heavy lifting by first creating care package specifications, convincing providers to self organize and deliver care in this way, and careful conversations with payers to modify their current process to finance this new delivery mechanism. Of interest, the response by patients, providers, and payors has been overwhelming. Official launch date is January 22 – stay tuned.

I, for one, will certainly be cheering from the sidelines: “Go team, hold that line (item)!”


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