The 1960s marked the end of “the good old days” of America’s health care system. In those days, there were no HMOs, PPOs, medical exchanges and the like; there were just doctors, hospitals, and health insurance. Health insurance protected against unexpected medical conditions and reimbursed according to the UCR, the usual, customary, and reasonable. The 1960s were much simpler.
Indeed, there were medical malpractice lawsuits, but people had more realistic expectations when bad results sometimes happened that were unpreventable. As the legal profession grew, there was less tolerance of adverse outcomes, more suspicion of fault and more incentive to sue.
Some jury verdicts were sensational. As an example, in 1986, a woman, who sued because a CT scan resulted in the loss of her psychic powers, was awarded $988,000. If this woman had psychic powers, why did she not know this would happen before the CT scan? As malpractice lawsuits became more frequent, correspondingly, fees-for-service, UCRs, and the nationwide cost of health care increased.
The 1960s, also, embraced “universal health care.” The health insurance industry began experimenting with “managed competition.” This ushered in the era of HMOs and PPOs.
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Policymakers, who wanted nothing more than socialized medicine, bought into managed competition. “Health plans” replaced health insurance. “Quality assurance” replaced covered benefits. “Best practice” replaced standard of care. “Network” replaced private practice. “Allowable” replaced UCR. “Assignment” replaced reimbursement. “Insured life” replaced patient. “Provider” replaced physician. Nothing replaced the American Medical Association (AMA) because it did nothing and favored universal health care.
A doctor can choose to be a “participating provider” for some health plans and a “non-participating provider” for others. Non-participating providers were called “out-of-network” providers.
“Participating” providers were called “in-network” and “preferred” providers. They were preferred, not for any exceptional skill or reputation, but because they were “in the book.” Preferred was just a euphemism.
The “allowable charge” was the maximum amount that will be paid. It replaced the UCR. Unlike UCR, which was universal for a CPT-4 code, different health plans had different allowables for that code and this was why doctors participated in some and not in others. If the doctor participated, “allowable” was payment in full. “Assignment” was reimbursement for all or a portion of the allowable charge, depending on the participation of the provider and whether the patient was in the HMO or in the PPO.
All HMO patients selected a primary care provider. Whether an HMO or a PPO patient, any appointment with a preferred provider, who was not a primary care provider, must have a referral. For HMO patients, reimbursement is the “assignment” and there is no patient responsibility. PPO patients are responsible for the difference between the allowable and the assignment. In either case, if there is no referral, patients are the responsible parties. All insured lives have a copayment at each visit and a yearly deductible. All insured lives were completely free to see out-of-network providers; however, they would not be reimbursed.
There was also the “point-of-service option,” or POS. The POS patient could see any physician in or out-of-network. When they saw in-network providers, they had no out-of-pocket expense except for copayments. Otherwise, they were responsible for the fee-for-service minus the allowable.
If this was not confusing enough, health plans often leased their provider networks to other health plans that had different allowables. When participating providers of one health plan saw an insured life of that other health plan, they were bound to the allowable of the other health plan, essentially neutralizing the provider’s reason to be a non-participating provider. Regarding malpractice insurance, whether a participating provider or a non-participating provider, providers are responsible.
Finally, on March 23, 2010, HR 3590, the Affordable Care Act, passes, and all the above are legitimized. It came as no surprise that the AMA supported the Affordable Care Act. The stage is set for the next and final act: socialized medicine.
As per caveat emptor, a common-law doctrine that places the burden on buyers to reasonably examine property before making a purchase, knowing the difference between these species of providers is the responsibility of insured lives.
In operation, “balanced billing” became contentious. Legislators proposed HR 3029, the Health Care PRICE Transparency Act that either placed the onus of “transparency” on providers or would force providers to participate with all health plans or not participate with any. This bill has an ignominious death in the 117th Congress. However, socialized medicine is coming.
Some doctors choose to wash their hands of this entire mess by simply retiring early. Others find ways to wash their hands while remaining in practice by either joining an independent practice association or IPA, or an accountable care organization or ACO. By so doing, their patients are unwitting users of the organization they join and unwitting victims of outcomes-based practice guidelines to which they agree as a condition for joining.
Some doctors, usually in primary care, choose concierge medicine. They typically limited their entire practices to 500 patients and collected an annual retainer from each, ranging from a few hundred dollars per year to a few thousand. By remaining participating providers, they accept assignment each time they see a patient. Also, as primary care physicians, referrals are not necessary and they can see a patient as often as they want. If concierge doctors charged a yearly retainer of $500, that, alone, is a quarter of a million dollars per year. Reimbursement of “assignment” was the icing on the cake.
What does any of this have to do with medical malpractice? The answer is “everything!” The single variable underlying these business decisions for a doctor is medical malpractice insurance coverage. Anything that destabilized health care destabilized the nation. Socialized medicine is the next act.
Howard Smith is an obstetrics-gynecology physician.
