Gone are the days when HMOs could rationally say that they would be able to find ways to keep costs down by providing "economies of scale" and "ensuring cost efficient practices." It is pretty evident that the way that premium costs were held down over the past 10-15 years is that the HMOs forced physicians and hospitals to accept lower reimbursement for their services. They did this so well that their profits soared, leading to overpaid CEOs and unrealistic Wall Street expectations for future growth and earnings.
Let's just say that the bottom of the barrel has been reached. Hospital operating margins are razor thin, and physicians are unwilling to accept further decreases in payment. Presently, much of the insurance companies' profits come from denial and delay of payment, making money on the "float." In my practice, it has become routine that payment for even preauthorized procedures are subsequently denied, with payment significantly delayed; protests are met with cries of "ERISA," which legally prevents us from pursuing legal action.
Now we see the latest attempt to squeeze physicians further, "tiered" payment (emphasis is mine):
Some plans, like Premera and Blue Cross of California, are comparing doctors' relative cost-effectiveness. Others, including Aetna and PacifiCare, are also factoring in clinical quality. But even when they do that, cost remains king.
PacifiCare, for example, culls the most efficient physicians for its Value Network before it evaluates their clinical performance. "We need to be able to offer it on a discount basis compared to a standard network," explains FP Sam Ho, PacifiCare's chief medical officer. "If you're not going to be cost efficient, there won't be much attraction for this product."
Ho observes that some doctors who score high on quality are less cost-efficient than other physicians. "If consumers want those providers, they can select them in the standard tier, but they have to pay more. For instance, they have to pay 30 percent coinsurance instead of 10 percent. Or, in the standard network, maybe they'll have to pay 10 to 15 percent more in premiums than they would in the Value Network.
So, if your insurance company offers you a lower co-payment to see Dr. X versus Dr. Y, is that a good deal for you? Chances are, you'll never know. As Medpundit aptly points out,
And how do they decide who rates for the favored program? Not by reviewing their charts or patient outcomes, but by looking at the money the insurance company spent paying claims.
Across the country, millions of dollars are being spent by hospital systems, physician groups, medical schools, etc. to identify and promote "best practices;" this basically means that we are constantly looking for ways to improve patient care. Generally speaking, most (sane) people would agree that the best way to care for patients is to get them into the hands of the most qualified physician to handle their particular problem. It is my contention that patient care costs rise (rather precipitously) when this basic tenet of care is circumvented, often with the purported goal of "cost savings."
I would also like to point out that when discussing a pancreatectomy or laparoscopic splenectomy with a patient and his/her family, I have never been asked if I am the "discount" physician.