ITIC Global: Medical costs in the US
Jason Davis, Raija Hoppula Itzchaki and Gitte Bach shared their wisdom on the US healthcare system, giving the audience insights into legislation and negotiation that can help international payers contain their exposure to healthcare costs
Jason Davis, Senior Vice President, The Phia Group and Phia International
“If you can understand cost containment the way Americans understand it, then you can explain it to the rest of the world,” Jason began.
US healthcare costs have been going up for over 40 years, and it stands currently with a $4.5-trillion value, with no limits on charges leading to bizarre bills being issued by healthcare providers. Davis cited a recent example for a knee surgery coming in at US$941,000. He then looked at the issue of how ‘In-Network’ and ‘Out of Network’ costs confuses patients and payers.
Pre 2010, the US healthcare system was full of ‘bad surprises’ for users and payers, ranging from being denied healthcare due to pre-existing conditions, annual and lifetime limits on health benefits, and the possibility of being denied for being ‘Out of Network’. It also saw 18 per cent of the US uninsured.
Obamacare, or the Affordable Care Act, introduced significant change to the system, from having to be insured as an individual, to insurers being compelled to spend money on healthcare – but this was not fool proof solution to all the issues within the US healthcare ecosystem. Due to the ways in which the Act was open to interpretation, the door was left ajar for the bad surprises to continue, particularly surrounding Out of Network claims.
With inflation continuing to rise, the biggest ‘bad surprise’ for insurers and patients is that so do the costs, seeing 60 per cent of personal bankruptcies tied to healthcare and employer premiums and deductibles rising much faster than wages since 2010.
In 2020, President Donald Trump, although controversial to say the least, introduced further changes to the system, increasing price transparency, and introducing the No Surprises Act (NSA), which was seen by Davis to be a ‘compassionate response to US healthcare’.
Raija Itzchaki, Results International Consulting, Inc.
“Over a 20-year period, hospital costs have increased 250 per cent,” stated Itzchaki, “outpacing every major segment of the economy.” Pre the NSA, insurers could choose to pay what was deemed a fair settlement, ultimately turning the residual cost over to the patient (balance billing), rendering them responsible for their costs.
The introduction of the NSA essentially equals no surprise balance billing, with two elements being key when it comes to Independent Dispute Resolution Process (IDRP). The 30-day open negotiation period and the payment rate being based on QPA (qualifying payment amount).
So for US insurers, there has been a sea change: “You can settle the bill without involving the patient – leaving you to find a fair settlement amount,” stated Itzchaki.
The IDRP process applies to air ambulance bills too when unreasonable, she explained: “Price transparency for air ambulance is built in to the NSA where that requires air ambulance providers to start submitting their costs and payment data to government to eventually establish median prices,” concluded Itzchaki.
Gitte Bach, President and CEO, New Frontier Group
Bach shared insights into the kinds of tools domestic and international insurance companies can use when negotiating bills with hospitals. When thinking about negotiation techniques, she noted, ‘relationships with providers are extremely important’. During a time where everyone is subject to inflation and restriction, be that due to post pandemic staffing issues as nurses seek lucrative contracts, or supply chains being broken and affecting providers in a way that may not have been considered previously, the audience were reminded that the way forward has to involve ‘finding a way to make this work for everyone’.
“Relationships with transparent and open communication equal maximised outcomes,” she told the ITIC audience.
Bach then posed the question of whether or not Value Based Care (VBC) can help global populations. In theory, she said, yes it can. With payment predetermined and package price based at patient outcomes, VBC can prove to be extremely valuable and a great success – changing ‘sick care’ to ‘well care’.
The value of anything is held in its perception, with Bach maintaining during the post-presentation discussion there would be a ‘cost shift if everyone agrees … it takes transparency and collaboration’.