>The popular image of a denial is an insurer overruling a doctor on whether a treatment is needed. That is the exception. Only about 5% of denied in-network claims were turned down because the care was deemed not medically necessary. The rest were administrative, for an excluded service, for a missing referral or prior authorization, or for a reason the insurer never specified.
When an insurance company denies a health claim overruling a doctor, it can be necessarily concluded that either:
1. somehow the company knows more about the patient's condition and the doctor is wrong
2. the doctor is defrauding the system and the insurance company caught the doctor cheating
3. the company is defrauding its clients.
There is no middle ground honestly, and yet "5% of denied in-network claims were turned down because the care was deemed not medically necessary".
This is absolutely crazy and evil. I would expect a few thousand cases annually and probably for million of cases you get denied what you pay for because "we detected your doctor is wrong and we're not paying".
>In fact the single largest category, 36% of denials, was an unexplained "other." A system that rejects tens of millions of claims a year and files more than 1/3 of those rejections under no stated reason is hard for an outsider, or a member, to audit.
I can't even imagine getting lifesaving care denied because of "other". I didn't know things were so grim in the USA and honestly now I'm kinda surprised that more people are not getting "Luigi'd".
> 5% of denied in-network claims were turned down because the care was deemed not medically necessary".
I think the truth is murkier than what you're providing. With the caveat that I am presenting a strong case here that likely isn't what occurs most of the time, consider this:
A person may require long-term therapy after an illness. There are data suggesting that beginning this therapy works better once you attain a certain level of clinical recovery in the hospital. There are also data suggesting that it's better to begin the long-term therapy as early as possible.
Both sets of data are, on their face, credible. There is no obvious reason to always believe one set of data over another. Reasonable people can make reasonable arguments to reasonable listeners for either case. Note that this does not mean that there is not a 'correct' interpretation for any given person's clinical situation!
So what does your insurance company favor? Obviously it will always favor the less expensive option, and there will be no way for them to be convinced otherwise because the underlying question is just not well-determined.
But in a case where either treatment choice could be reasonable, doesn't it seem like a better answer for the insurance company to defer to your doctor rather than their own assessment? Whoever is making that determination at the insurance company doesn't know you, hasn't treated you, may or may not have more expertise on the specific illness than your doctor, and as you pointed out the insurance company doctor is ultimately motivated by keeping costs low more than they are motivated by keeping you healthy.
Obviously I can see why the insurance company would prefer to be making decisions about your treatment, but it's not obvious why any of the rest of us should view that as an optimal or even acceptable way of running healthcare. It's essentially the car insurance model but with vastly higher consequences, and it's not great even when it comes to car insurance.
That is still the insurer saying they know more about the medical situation than the doctor. The doctor is the one who is equipped to decide what is necessary.
The doctor is not infallible. He or she is likely extremely busy, and under many pressures, e.g.:
- patients who adamantly insist on X treatment, make a fit and threaten a bad review, even though they don't need it
- fear of malpractice suits (e.g. 99.9% chance treatment is unnecessary and a waste of money, but in the 0.1% case I might get sued to oblivion if I didn't prescribe it)
- intense lobbying from pharma companies who spend boatloads of money trying to convince them to prescribe their products
In general, they don't directly pay the costs of using limited healthcare resources, but they can pay serious costs for failing to use them, so their incentives are skewed.
Our current system is far from ideal. But a system where a single person gets to make all the decisions, while foisting all the financial burden on someone else, would collapse within a week. Someone has to be the bad guy to sometimes say "we can't afford this, sorry".
... which many would argue is between a patient and their doctor. We dont pay premiums for no reason, and the insurance company isnt really allowed to determine what "necessary" means.
There is absolutely a middle ground? The healthcare system, like any system, has an incentive structure. Doctors are incentivized to prescribe treatments, because that's how they make money for themselves and their practice. Doctors are not angels sent from heaven, they're people like you and me, and they respond to incentives like you and me. It's also well known that people strongly prefer receiving treatment over not receiving treatment, even when the cost to their health of receiving that treatment outweighs the expected benefit! Given that people push their doctors into prescribing treatments, and doctors are incentivized to go along with it... you would obviously expect some proportion of prescribed treatments to not be medically necessary. 5% sounds about right. And the kicker is that denying these treatments improves health outcomes for the general population, because those medical resources can get routed to the people who actually need them. Every successful public health system has an opposing force built in to it to limit the spurious consumption of scare medical resources, because without such a force costs balloon and the system becomes unsustainable. Not to defend the US healthcare system of course, our cost problem is worse than anywhere else...
> Doctors are incentivized to prescribe treatments, because that's how they make money for themselves and their practice.
This is literally illegal! Physicians cannot refer patients to entities they own or have an interest in.
What is perverse is that, while we have the Stark Law to constrain physician behavior, we've decided that it's okay if a diffuse group like a non-physician-owned hospital chain enforces rules to this effect.
> This is literally illegal! Physicians cannot refer patients to entities they own or have an interest in.
There has to be a done of exceptions to this.
You see a cardiologist and they recommend a stent. They aren’t going to recommend a different cardiologist does it.
You see a doctor, and they refer you for a test. They have a share portfolio that contains shares in the facility they referred to.
Medicine is riddled with potential conflicts of interest. Managing them is what professionals are supposed to do and what regulators are supposed to enforce.
I don’t live in the US, I’m a n Mew Zealand. Sadly, I am aware of behaviour that looks like corruption in our system.
> You see a cardiologist and they recommend a stent. They aren’t going to recommend a different cardiologist does it.
Things must be different in NZ.
First, it's true that you're going to want to go to who your doctor knows/recommends. The law in the US is just that they can't refer you to a group they own/their spouse owns, or for which they get a financial benefit.
Next, you're speaking about the doctor doing a consult visit before doing a procedure. That is not the same thing as ordering a treatment for you to go get the treatment elsewhere—which describes what happens you go to the pharmacist to get drugs.
Finally, the cardiologist you see in the office is almost certainly not doing stents for you as those are very distinct skillsets (in the US).
>Finally, the cardiologist you see in the office is almost certainly not doing stents for you as those are very distinct skillsets (in the US).
Umm, what? No. It's exceedingly rare for an interventional cardiologist in the US not to do office work. The average number of PCI/yr is like 50 or something. Plus if one spent all one's time in the cath lab, they'd have a spinal fusion, knee replacement, thyroid cancer, and cataracts.
But what you are trying to get at is that there is law about self-referral ("Stark law") but in reality there are exceptions that render it fairly useless
Diagnostic imaging companies - each of the big ones (Siemens, GE, Philips) all offer in-house financing on very favorable terms for MRI, CT, etc., that they specifically advertise to physicians. They also all offer specialist consulting help to facilitate you getting a CoN (Certificate of Need) for your facility. Hell, they also will help you find other physicians in your area who'd like to go in with you on setting up a DI facility, and they will assist with spinning up the practice.
We then find that physicians who own a DI practice (or a share in one) refer their patients to diagnostic imaging at rates several standard deviations above other physicians and at rates that are "statistically improbable" when correlated to underlying ICD-10 diagnostic codes.
Everything above is fair, if true. I don't see a reference in your answer so I can't assess the quality of evidence.
The point is that they cannot refer you to one of their companies. Of course, there may not be a meaningfully-competitive local market, so patients may end up needing to go to the physician-owned imaging facility. I do not thing this is a large issue for most of the US population though it's probably an issue on a spatial basis.
> Of course, there may not be a meaningfully-competitive local market, so patients may end up needing to go to the physician-owned imaging facility.
Certificates of Need. A legal requirement in most states for creating a new healthcare facility. Ostensibly to make sure that the population in that area has adequate healthcare options. But lobbied for by healthcare facility and hospital owners, it actually surveys other providers (your competitors) in the area and asks if their revenue would be adversely affected by you opening up. Too much of this, and no CoN for you.
Having worked at companies that built software for health insurers, I have seen the "evil" you describe. From "hey, can we mine the claims database for suspected/confirmed familial relationships and look at possible diagnoses to assign risk profiles?" No, you can't. "Why not? It's in the database." Because it's federally illegal. "Oh. So you won't expose that data?" We won't.
In this case, two things:
The system decides on the initial denial at most insurers. And when a claims adjuster reviews, the system is presumed to be accurate, and the adjuster has to provide reasoning to overturn the system's denial (this is before the denial has been returned to the provider). It's not "assume the provider was correct", but "we've decided to deny it, give the system reasons why we shouldn't". And that person reviewing it is often an LPN (no shade thrown at LPNs, but they shouldn't be overriding physician decisions, doubly so given an absent history).
How this has affected me personally: I had, for most of my life, a severely deviated septum. I spent most of my life mouth breathing because I could barely pull enough air through my nostrils to make breathing that way not an active effort. I finally went to an ENT who confirmed, sure enough, an approximately ninety per cent deviation. "Great, so lets schedule surgery". ENT: "Slow down. First I have to prescribe you these two nasal sprays so that when you come back in four weeks and report no change, because to both our disappointment, the sprays didn't realign and open up the cartilage in your nose, then I can submit the pre-auth to your insurer and they won't immediately reject it." What a fucking joke.
> "we detected your doctor is wrong"
It's not even that your doctor is wrong, it's "our nurses/expert systems disagree with your doctor so we're not paying".
You ever been to an obstinate DMV? Dealt with an obstinate permitting office? They all act like this. They unilaterally concoct rules that make it hard for honest people doing honest things to get the outcomes they ought to.
Healthcare ain't no different. Bureaucracy gonna bureaucracy.
It seems kind of silly to tout the 5% "not medically necessary" line when 7 times as many were denied for "a reason the insurer never specified". I wouldn't really describe claim denials for reasons like administrative or missing referrals as value neutral either. These are roadblocks controlled by insurers that waste patient and provider time, and reduce access to care.
I was on one of the insurers that denied the fewest claims. However, they also had the fewest doctors. I live in a good sized metro area, but the only podiatrist was 50 miles away in a tiny town. I imagine that had the same ultimate result of denying claims.
When I went to an in-network ENT (that I found on my insurer's website) they were billed $850 for my 10-minute exam. The insurance said they'd pay $550. So I got to pay the rest. And this is gold coverage with an already-met deductible. You just never know what the roulette wheel is going to hand out.
Makes me think of that study a few years ago that found most Americans couldn't afford an unexpected $400 medical bill.
You may have had 10 minutes face-time with your doctor, but he spent time before your exam reviewing your case, and time afterwards dictating the notes. So likely 30-40 minutes was spent on you and this does not include the nurses and front desk support staff, the janitor cleaning the toilets, all who need a living wage, rent and/or property tax for the facility, facilities maintenance and upkeep.
Not to mention the $$$ paid to greedy software engineers for all the mandatory e-health software systems which are all recurring-payment SaaS now raking in crazy amounts of cash.
Do you think your doctor is pocketing all that money? The average do-nothing schlub working in tech is making more than his doctor.
What insurance company do you use? I thought that in-network means the provider has agreed to accept the insurers usual and customary rate and that you are not liable for the difference.
This was Providence in Oregon. I thought that's what it meant, too. But in this case there's a contracted "allowed amount" that is all the insurance will pay the doctor. If the doctor chooses to charge more, you get to pay that.
Which really freaks me out. If you're insured at a contract rate of $5000 and they bill $30,000...?
As an example, when my ex was trying to price ultrasounds on a breast lump as self pay before choosing where to go, the billing departments refused to quote her without the billing codes for the procedure, which requires a treatment plan, which requires an appointment with a doctor at that office or hospital.
It took a month of calling around before a nurse who worked between departments took pity on her and leaked her the common billing codes. Once she got a quote, the estimates dropped from thousands out of pocket on her insurance to a few hundred, to an office comping the procedure.
She works in healthcare. I wouldn't have even known where to begin after being told no.
I like the US healthcare system as much as anyone, but this analysis seems to border on useless. Even examining by the type of claim does not control for validity of those claims.
s/like/dislike would have made it easier to understand at the expense of missing out on the (possibly accidental) sarcasm which makes the comment more rewarding to those who did understand it
People like to complain about things and have very unrealistic perceptions of what other systems are like. It's also really unpopular online to say good things about the US healthcare system. It definitely has some issues, but it also does some things really, really well.
These are, of course, anecdotes, but here some things from my life:
- Next day MRI for my wife after she injured her back at the gym. Had it been more serious she would have been seen the same day.
- Friend's kid was diagnosed with leukemia. They were admitted to the cancer ward the next day, where they stayed for months. The room was large, with a pull out double bed for my friend and his wife to sleep on. The same thing happened with my cousin when she was diagnosed with a brain tumor.
- Our kids were both born at one of the "poor" hospitals in the largest city in our state. We were the only ones on the floor who shared the same last name, and most patients did not speak English. It was excellent. We had our own room (with bathroom, shower, small bed for me to sleep on), great staff, etc.
- Urgent care available 7 days a week at numerous locations within a 5-10 minute drive from my home. Typically a 15-20 minute wait for things like stitches, burns, dislocated fingers, etc.
- Nice pharmacies all over the place, which also provide things like vaccinations. Lots of our medications are now just shipped to our house directly
- The small surgeries I've needed have been done within 2-3 weeks of meeting with my primary care doctor. If they would have been more serious, the timeline would have been significantly shorter, within a day or two. Things like colonoscopies are also available within a number of weeks.
- The hospital system we use has done a really good job embracing technology. The app/website they offer can be used to view all of your test results, message the doctors or nurses, schedule appointments, etc
> - Next day MRI for my wife after she injured her back at the gym. Had it been more serious she would have been seen the same day.
I had same-day CT for suspected diverticulitis/kidney stones. I had same day x-ray, ultrasound for hyperextension of my wrist (steering wheel airbag going off pushed my hand backwards towards my elbow)... all good. I was told to start PT immediately...
... "we can see you in 8-10 weeks." "We're not accepting new patients". "In 3 months, does that work?"
I've also worked for 14 years as a paramedic and EMT, and seen first hand the sheer number of simple things that become acute care issues requiring the ER that could have been prevented by simple access to a primary care provider.
> Nice pharmacies all over the place, which also provide things like vaccinations. Lots of our medications are now just shipped to our house directly
My insurer will only authorize 90 day prescriptions if you use their wholly owned pharmaceutical subsidiary. Otherwise they will deny anything longer than 30 days for no medical reason. They still charge precisely 3x30 days, but they just want exclusivity with their own vertical integration (which, conveniently, is exempt from laws on insurer profit margins - the only way for an insurer to make more money per capita is if healthcare, including pharma, costs go up).
If patients and doctors start using LLMs to strategize how to maximize claim approval rate, I wonder how would the insurance companies react to it. Would it start getting more strict and start requesting for more evidence?
This is already a thing! For example, Neon Health does this for providers. I haven't heard of any changes to the process yet, but I imagine insurers move slower than startups.
I would watch out for insurance as an industry having to increase rates because successful claims rate are increasing much faster than the industry can handle.
Not supporting nor opposing the insurance industry, just something I think the public should watch out for and understand.
Again, this is already happening. Hospital side care providers use systems which optimize for expected payout value. That increases payout totals and insurance costs for everyone.
The ACA tried to make health outcomes a part of the calculation for everyone involved but it is hard to compete with the all mighty dollar.
"Repricers" work on both sides of the equation - providers and provider networks use them to maximize the procedure codes around an ICD-10 diagnosis code.
And insurers use them to minimize the list of procedures they'll accept and pay for around a given ICD-10 code.
Before everyone wants to throw a rock at another CEO...
> Only about 5% of denied in-network claims were turned down because the care was deemed not medically necessary. The rest were administrative, for an excluded service, for a missing referral or prior authorization, or for a reason the insurer never specified.
I worked in health tech for a while, and I can tell you the muck around a lot with ICD/CPT codes to maximize billing along with other shenanigans. There was actually a project at an innovation center at a well-known medical center which leveraged ML to maximize the amount of codes they could bill for without being rejected. The same kind of thing is often done by physicians who want to juice insurance.
Be mad--very mad--at hospitals and drug cos. As providers, they present themselves as patient advocates, but they're responsible for the outrageous healthcare costs. The dollar amount paid out by US insurance companies is maybe 2x that of other OECD countries, but the healthcare we get back from providers is trash (and extortive) by comparison.
> There was actually a project at an innovation center at a well-known medical center which leveraged ML to maximize the amount of codes they could bill for without being rejected. T
I think this perspective makes sense from someone who works on the insurance side of things.
On the other side, there is no way for the insurance company to acknowledge the clinical severity of a patient except via abstruse ICD code choices that only billing clerks know. So this is a perfect case for an LLM - map normal human words onto ICD claim codes to accurately convey patient severity.
Good thing the moral hazard of getting unnecessary healthcare that your doctor ordered for you is controlled for.
Perhaps someone should also control the moral hazard of the people owning and running this racket getting unnecessary amounts of money, or an unnecessary seat at the table.
The moral hazard is making a product with nearly totally inelastic demand a multi layered adversarial free market with structural price opacity. Thanks Reagan!
Reagan hasn't been president for close to 40 years and died more than 20 years ago. At what point do we accept responsibility for this instead of blaming dead presidents?
You might be surprised just how durable the effects of 40-year-old decisions are. You can actually see changes to the very degree completion-rates, when partitioned by field of study. Particularly, education and physics fields (as classified by NCES), have absolutely cratered from the mid 70s to the mid 80s, while business fields became dominant. And if you need data, I actually published an entire (and entirely too long) essay, analyzing the NCES data from 1970 to 2011 (a sequel post for 2011 to present is planned), yesterday[0][1]. Healthcare tends to boom and bust[2] in cycles, and those cycles are _inversely_ correlated with engineering, informatics (the most elegant term for what we call "computer and information sciences"), and business.
[2]: In both the economic sense, and in the completion-rate sense, because those two things are correlated. And they have been correlated since the 1980s, because a lot of the healthcare industry became de-regulated and more profitable as a result, since at least 1978 (when hospitals were de-forbidden from making profits).
Everyone is in on the grift in the industry. Obama wanted to go single payer but realized 10% of america would be out of a job if we streamlined the bureaucracy
Obama proposed and pushed for single payer and it was voted down in the senate. Specifically, if you want to blame someone, it was Joe Lieberman who would have been the deciding vote, and he killed it.
Joe Lieberman realized that he was from a state with massive moneymaking insurance operations. Had nothing to do with Obama streamlining bureaucracy.
> Specifically, if you want to blame someone, it was Joe Lieberman who would have been the deciding vote, and he killed it.
I too believed that Joe Lieberman sucked, and sure, he did. However: there's a pattern of parties creating convenient designated villains within the party (usually someone not up for re-election) who can take the blame for doing the thing the party insiders planned to do all along. It's been especially noticeable in the current Congress.
When the designated villain sticks it to us next time, notice how there are zero consequences for them.
Maybe it’s a massive insider conspiracy to have the party ruin its own landmark legislation of the era and all of the coconspirators have kept their mouth shut on a major scandal for more than a decade.
Maybe it was the 1.1 million dollars in donations from the healthcare industry to Joe Lieberman.
> Maybe it was the 1.1 million dollars in donations from the healthcare industry to Joe Lieberman.
Frankly Joe should've been furious about how little he received, then:
> Campaign finance: The key players in the crafting of Obamacare were largely dependent upon health industry corporations for election and re-election. Barack Obama received $22.4 million in 2008, and the health sector was his third-most-important source of corporate donors (health industry donations alone were thirty-two times greater than all labor union contributions to Obama). The twenty-three members of the Senate Finance Committee (SFC) received nearly $16 million in 2008 and $20 million in 2010. Since 2003, the Committee’s Chair, Max Baucus, had received $3.4 million, or 23 percent of his total campaign donations; the minority leader, Republican Charles Grassley, had received $2 million. Committee members’ opposition to a “public option” that would compete with private insurers tended to correlate with donations from the health industry over the previous two decades.27 The structure of the electoral process thus guaranteed the presence of health industry loyalists in key Congressional offices.
What we have today isn't insurance in any meaningful sense. Traditional insurance is about pricing risk: healthier people pay less, higher-risk people pay more, and the pool works because premiums reflect actuarial reality.
The Affordable Care Act largely banned that. Insurers can no longer use health status or pre-existing conditions to set rates (via "community rating" and guaranteed issue rules). The result is that everyone effectively pays into a giant, heavily regulated pool. There's a finite amount of money in that pool, so someone has to ration care. That job now falls to the insurance companies, who deny or delay procedures, medications, and treatments.
Health insurers aren't saints — but the core problem is structural. When you remove risk pricing while mandating coverage, adverse selection and cost shifting are inevitable. The ACA patched one serious issue (pre-existing conditions) by breaking the fundamental mechanism that makes insurance sustainable.
We need to be honest about the tradeoffs instead of pretending this is still "insurance."
That's not necessarily a problem in and of itself, there's plenty of areas in life where we have essentially a tax by another name or system. The problem I see, looking from the outside from a country with a "universal" health system, is that the American way of doing it is extremely complex, which pushes up the price of everything. It's not that there are profits involved, it's that there are so many incentives, and then patches to prevent them, generating more in other places.
>The popular image of a denial is an insurer overruling a doctor on whether a treatment is needed. That is the exception. Only about 5% of denied in-network claims were turned down because the care was deemed not medically necessary. The rest were administrative, for an excluded service, for a missing referral or prior authorization, or for a reason the insurer never specified.
When an insurance company denies a health claim overruling a doctor, it can be necessarily concluded that either:
1. somehow the company knows more about the patient's condition and the doctor is wrong
2. the doctor is defrauding the system and the insurance company caught the doctor cheating
3. the company is defrauding its clients.
There is no middle ground honestly, and yet "5% of denied in-network claims were turned down because the care was deemed not medically necessary".
This is absolutely crazy and evil. I would expect a few thousand cases annually and probably for million of cases you get denied what you pay for because "we detected your doctor is wrong and we're not paying".
>In fact the single largest category, 36% of denials, was an unexplained "other." A system that rejects tens of millions of claims a year and files more than 1/3 of those rejections under no stated reason is hard for an outsider, or a member, to audit.
I can't even imagine getting lifesaving care denied because of "other". I didn't know things were so grim in the USA and honestly now I'm kinda surprised that more people are not getting "Luigi'd".
It should be noted that they use the term “medically necessary” which is a very low standard.
There is also “medically reasonable”.
For example getting your teeth cleaned professionally is not medically necessary. But it’s medically reasonable.
I don’t want a health insurance that only does “Medically necessary” things.
> 5% of denied in-network claims were turned down because the care was deemed not medically necessary".
I think the truth is murkier than what you're providing. With the caveat that I am presenting a strong case here that likely isn't what occurs most of the time, consider this:
A person may require long-term therapy after an illness. There are data suggesting that beginning this therapy works better once you attain a certain level of clinical recovery in the hospital. There are also data suggesting that it's better to begin the long-term therapy as early as possible.
Both sets of data are, on their face, credible. There is no obvious reason to always believe one set of data over another. Reasonable people can make reasonable arguments to reasonable listeners for either case. Note that this does not mean that there is not a 'correct' interpretation for any given person's clinical situation!
So what does your insurance company favor? Obviously it will always favor the less expensive option, and there will be no way for them to be convinced otherwise because the underlying question is just not well-determined.
But in a case where either treatment choice could be reasonable, doesn't it seem like a better answer for the insurance company to defer to your doctor rather than their own assessment? Whoever is making that determination at the insurance company doesn't know you, hasn't treated you, may or may not have more expertise on the specific illness than your doctor, and as you pointed out the insurance company doctor is ultimately motivated by keeping costs low more than they are motivated by keeping you healthy.
Obviously I can see why the insurance company would prefer to be making decisions about your treatment, but it's not obvious why any of the rest of us should view that as an optimal or even acceptable way of running healthcare. It's essentially the car insurance model but with vastly higher consequences, and it's not great even when it comes to car insurance.
4. It's something that might help a bit, but the patient would still be fine without. Ie, a disagreement over what "necessary" means.
That is still the insurer saying they know more about the medical situation than the doctor. The doctor is the one who is equipped to decide what is necessary.
The doctor is not infallible. He or she is likely extremely busy, and under many pressures, e.g.:
- patients who adamantly insist on X treatment, make a fit and threaten a bad review, even though they don't need it
- fear of malpractice suits (e.g. 99.9% chance treatment is unnecessary and a waste of money, but in the 0.1% case I might get sued to oblivion if I didn't prescribe it)
- intense lobbying from pharma companies who spend boatloads of money trying to convince them to prescribe their products
In general, they don't directly pay the costs of using limited healthcare resources, but they can pay serious costs for failing to use them, so their incentives are skewed.
Our current system is far from ideal. But a system where a single person gets to make all the decisions, while foisting all the financial burden on someone else, would collapse within a week. Someone has to be the bad guy to sometimes say "we can't afford this, sorry".
... which many would argue is between a patient and their doctor. We dont pay premiums for no reason, and the insurance company isnt really allowed to determine what "necessary" means.
There is absolutely a middle ground? The healthcare system, like any system, has an incentive structure. Doctors are incentivized to prescribe treatments, because that's how they make money for themselves and their practice. Doctors are not angels sent from heaven, they're people like you and me, and they respond to incentives like you and me. It's also well known that people strongly prefer receiving treatment over not receiving treatment, even when the cost to their health of receiving that treatment outweighs the expected benefit! Given that people push their doctors into prescribing treatments, and doctors are incentivized to go along with it... you would obviously expect some proportion of prescribed treatments to not be medically necessary. 5% sounds about right. And the kicker is that denying these treatments improves health outcomes for the general population, because those medical resources can get routed to the people who actually need them. Every successful public health system has an opposing force built in to it to limit the spurious consumption of scare medical resources, because without such a force costs balloon and the system becomes unsustainable. Not to defend the US healthcare system of course, our cost problem is worse than anywhere else...
> Doctors are incentivized to prescribe treatments, because that's how they make money for themselves and their practice.
This is literally illegal! Physicians cannot refer patients to entities they own or have an interest in.
What is perverse is that, while we have the Stark Law to constrain physician behavior, we've decided that it's okay if a diffuse group like a non-physician-owned hospital chain enforces rules to this effect.
> This is literally illegal! Physicians cannot refer patients to entities they own or have an interest in.
There has to be a done of exceptions to this.
You see a cardiologist and they recommend a stent. They aren’t going to recommend a different cardiologist does it.
You see a doctor, and they refer you for a test. They have a share portfolio that contains shares in the facility they referred to.
Medicine is riddled with potential conflicts of interest. Managing them is what professionals are supposed to do and what regulators are supposed to enforce.
I don’t live in the US, I’m a n Mew Zealand. Sadly, I am aware of behaviour that looks like corruption in our system.
> You see a cardiologist and they recommend a stent. They aren’t going to recommend a different cardiologist does it.
Things must be different in NZ.
First, it's true that you're going to want to go to who your doctor knows/recommends. The law in the US is just that they can't refer you to a group they own/their spouse owns, or for which they get a financial benefit.
Next, you're speaking about the doctor doing a consult visit before doing a procedure. That is not the same thing as ordering a treatment for you to go get the treatment elsewhere—which describes what happens you go to the pharmacist to get drugs.
Finally, the cardiologist you see in the office is almost certainly not doing stents for you as those are very distinct skillsets (in the US).
>Finally, the cardiologist you see in the office is almost certainly not doing stents for you as those are very distinct skillsets (in the US).
Umm, what? No. It's exceedingly rare for an interventional cardiologist in the US not to do office work. The average number of PCI/yr is like 50 or something. Plus if one spent all one's time in the cath lab, they'd have a spinal fusion, knee replacement, thyroid cancer, and cataracts.
But what you are trying to get at is that there is law about self-referral ("Stark law") but in reality there are exceptions that render it fairly useless
Diagnostic imaging companies - each of the big ones (Siemens, GE, Philips) all offer in-house financing on very favorable terms for MRI, CT, etc., that they specifically advertise to physicians. They also all offer specialist consulting help to facilitate you getting a CoN (Certificate of Need) for your facility. Hell, they also will help you find other physicians in your area who'd like to go in with you on setting up a DI facility, and they will assist with spinning up the practice.
We then find that physicians who own a DI practice (or a share in one) refer their patients to diagnostic imaging at rates several standard deviations above other physicians and at rates that are "statistically improbable" when correlated to underlying ICD-10 diagnostic codes.
Everything above is fair, if true. I don't see a reference in your answer so I can't assess the quality of evidence.
The point is that they cannot refer you to one of their companies. Of course, there may not be a meaningfully-competitive local market, so patients may end up needing to go to the physician-owned imaging facility. I do not thing this is a large issue for most of the US population though it's probably an issue on a spatial basis.
> Of course, there may not be a meaningfully-competitive local market, so patients may end up needing to go to the physician-owned imaging facility.
Certificates of Need. A legal requirement in most states for creating a new healthcare facility. Ostensibly to make sure that the population in that area has adequate healthcare options. But lobbied for by healthcare facility and hospital owners, it actually surveys other providers (your competitors) in the area and asks if their revenue would be adversely affected by you opening up. Too much of this, and no CoN for you.
Having worked at companies that built software for health insurers, I have seen the "evil" you describe. From "hey, can we mine the claims database for suspected/confirmed familial relationships and look at possible diagnoses to assign risk profiles?" No, you can't. "Why not? It's in the database." Because it's federally illegal. "Oh. So you won't expose that data?" We won't.
In this case, two things:
The system decides on the initial denial at most insurers. And when a claims adjuster reviews, the system is presumed to be accurate, and the adjuster has to provide reasoning to overturn the system's denial (this is before the denial has been returned to the provider). It's not "assume the provider was correct", but "we've decided to deny it, give the system reasons why we shouldn't". And that person reviewing it is often an LPN (no shade thrown at LPNs, but they shouldn't be overriding physician decisions, doubly so given an absent history).
How this has affected me personally: I had, for most of my life, a severely deviated septum. I spent most of my life mouth breathing because I could barely pull enough air through my nostrils to make breathing that way not an active effort. I finally went to an ENT who confirmed, sure enough, an approximately ninety per cent deviation. "Great, so lets schedule surgery". ENT: "Slow down. First I have to prescribe you these two nasal sprays so that when you come back in four weeks and report no change, because to both our disappointment, the sprays didn't realign and open up the cartilage in your nose, then I can submit the pre-auth to your insurer and they won't immediately reject it." What a fucking joke.
> "we detected your doctor is wrong"
It's not even that your doctor is wrong, it's "our nurses/expert systems disagree with your doctor so we're not paying".
You ever been to an obstinate DMV? Dealt with an obstinate permitting office? They all act like this. They unilaterally concoct rules that make it hard for honest people doing honest things to get the outcomes they ought to.
Healthcare ain't no different. Bureaucracy gonna bureaucracy.
It seems kind of silly to tout the 5% "not medically necessary" line when 7 times as many were denied for "a reason the insurer never specified". I wouldn't really describe claim denials for reasons like administrative or missing referrals as value neutral either. These are roadblocks controlled by insurers that waste patient and provider time, and reduce access to care.
I was on one of the insurers that denied the fewest claims. However, they also had the fewest doctors. I live in a good sized metro area, but the only podiatrist was 50 miles away in a tiny town. I imagine that had the same ultimate result of denying claims.
When I went to an in-network ENT (that I found on my insurer's website) they were billed $850 for my 10-minute exam. The insurance said they'd pay $550. So I got to pay the rest. And this is gold coverage with an already-met deductible. You just never know what the roulette wheel is going to hand out.
Makes me think of that study a few years ago that found most Americans couldn't afford an unexpected $400 medical bill.
You may have had 10 minutes face-time with your doctor, but he spent time before your exam reviewing your case, and time afterwards dictating the notes. So likely 30-40 minutes was spent on you and this does not include the nurses and front desk support staff, the janitor cleaning the toilets, all who need a living wage, rent and/or property tax for the facility, facilities maintenance and upkeep.
Not to mention the $$$ paid to greedy software engineers for all the mandatory e-health software systems which are all recurring-payment SaaS now raking in crazy amounts of cash.
Do you think your doctor is pocketing all that money? The average do-nothing schlub working in tech is making more than his doctor.
I didn't assert the doctor was pocketing it all out that there weren't other expenses. But if it costs $850, I'd like insurance to pay $850.
I don't think you understand how deductibles and coinsurance work.
If you want a near-zero plan, you will pay more per month in premiums.
I do understand, and that's not what happened in this case. I have top of the line gold coverage.
What insurance company do you use? I thought that in-network means the provider has agreed to accept the insurers usual and customary rate and that you are not liable for the difference.
This was Providence in Oregon. I thought that's what it meant, too. But in this case there's a contracted "allowed amount" that is all the insurance will pay the doctor. If the doctor chooses to charge more, you get to pay that.
Which really freaks me out. If you're insured at a contract rate of $5000 and they bill $30,000...?
Did you try looking for a less-expensive ENT?
I did not, but in my experience it's difficult to pry prices out of medical providers in advance.
As an example, when my ex was trying to price ultrasounds on a breast lump as self pay before choosing where to go, the billing departments refused to quote her without the billing codes for the procedure, which requires a treatment plan, which requires an appointment with a doctor at that office or hospital.
It took a month of calling around before a nurse who worked between departments took pity on her and leaked her the common billing codes. Once she got a quote, the estimates dropped from thousands out of pocket on her insurance to a few hundred, to an office comping the procedure.
She works in healthcare. I wouldn't have even known where to begin after being told no.
I like the US healthcare system as much as anyone, but this analysis seems to border on useless. Even examining by the type of claim does not control for validity of those claims.
> I like the US healthcare system as much as anyone
I can't tell if you're being serious. I'm not American but all of my American friends tell me the US healthcare system is an absolute nightmare
That phrasing may not translate well. "as much as anyone" means "Most people don't like it, and I don't like it either.".
My criticism of the analysis is not a defense of US healthcare.
s/like/dislike would have made it easier to understand at the expense of missing out on the (possibly accidental) sarcasm which makes the comment more rewarding to those who did understand it
'as much as anyone' = they don't like it
People like to complain about things and have very unrealistic perceptions of what other systems are like. It's also really unpopular online to say good things about the US healthcare system. It definitely has some issues, but it also does some things really, really well.
These are, of course, anecdotes, but here some things from my life:
- Next day MRI for my wife after she injured her back at the gym. Had it been more serious she would have been seen the same day.
- Friend's kid was diagnosed with leukemia. They were admitted to the cancer ward the next day, where they stayed for months. The room was large, with a pull out double bed for my friend and his wife to sleep on. The same thing happened with my cousin when she was diagnosed with a brain tumor.
- Our kids were both born at one of the "poor" hospitals in the largest city in our state. We were the only ones on the floor who shared the same last name, and most patients did not speak English. It was excellent. We had our own room (with bathroom, shower, small bed for me to sleep on), great staff, etc.
- Urgent care available 7 days a week at numerous locations within a 5-10 minute drive from my home. Typically a 15-20 minute wait for things like stitches, burns, dislocated fingers, etc.
- Nice pharmacies all over the place, which also provide things like vaccinations. Lots of our medications are now just shipped to our house directly
- The small surgeries I've needed have been done within 2-3 weeks of meeting with my primary care doctor. If they would have been more serious, the timeline would have been significantly shorter, within a day or two. Things like colonoscopies are also available within a number of weeks.
- The hospital system we use has done a really good job embracing technology. The app/website they offer can be used to view all of your test results, message the doctors or nurses, schedule appointments, etc
Right if you have insurance it’s pretty good. I’m happy. Most complaints you see are when you fall outside of that.
> - Next day MRI for my wife after she injured her back at the gym. Had it been more serious she would have been seen the same day.
I had same-day CT for suspected diverticulitis/kidney stones. I had same day x-ray, ultrasound for hyperextension of my wrist (steering wheel airbag going off pushed my hand backwards towards my elbow)... all good. I was told to start PT immediately...
... "we can see you in 8-10 weeks." "We're not accepting new patients". "In 3 months, does that work?"
I've also worked for 14 years as a paramedic and EMT, and seen first hand the sheer number of simple things that become acute care issues requiring the ER that could have been prevented by simple access to a primary care provider.
> Nice pharmacies all over the place, which also provide things like vaccinations. Lots of our medications are now just shipped to our house directly
My insurer will only authorize 90 day prescriptions if you use their wholly owned pharmaceutical subsidiary. Otherwise they will deny anything longer than 30 days for no medical reason. They still charge precisely 3x30 days, but they just want exclusivity with their own vertical integration (which, conveniently, is exempt from laws on insurer profit margins - the only way for an insurer to make more money per capita is if healthcare, including pharma, costs go up).
It’s definitely a sarcastic comment lol.
If patients and doctors start using LLMs to strategize how to maximize claim approval rate, I wonder how would the insurance companies react to it. Would it start getting more strict and start requesting for more evidence?
This is already a thing! For example, Neon Health does this for providers. I haven't heard of any changes to the process yet, but I imagine insurers move slower than startups.
Hospitals and some doctors already do - it isn’t a one-sided problem with insurance as the only group optimizing for their desired outcome.
I would watch out for insurance as an industry having to increase rates because successful claims rate are increasing much faster than the industry can handle.
Not supporting nor opposing the insurance industry, just something I think the public should watch out for and understand.
Again, this is already happening. Hospital side care providers use systems which optimize for expected payout value. That increases payout totals and insurance costs for everyone.
The ACA tried to make health outcomes a part of the calculation for everyone involved but it is hard to compete with the all mighty dollar.
"Repricers" work on both sides of the equation - providers and provider networks use them to maximize the procedure codes around an ICD-10 diagnosis code.
And insurers use them to minimize the list of procedures they'll accept and pay for around a given ICD-10 code.
Honestly, if this means a more certain payment confirmation up front and not a surprise bill, I see this as a good thing for patients.
Before everyone wants to throw a rock at another CEO...
> Only about 5% of denied in-network claims were turned down because the care was deemed not medically necessary. The rest were administrative, for an excluded service, for a missing referral or prior authorization, or for a reason the insurer never specified.
I worked in health tech for a while, and I can tell you the muck around a lot with ICD/CPT codes to maximize billing along with other shenanigans. There was actually a project at an innovation center at a well-known medical center which leveraged ML to maximize the amount of codes they could bill for without being rejected. The same kind of thing is often done by physicians who want to juice insurance.
Be mad--very mad--at hospitals and drug cos. As providers, they present themselves as patient advocates, but they're responsible for the outrageous healthcare costs. The dollar amount paid out by US insurance companies is maybe 2x that of other OECD countries, but the healthcare we get back from providers is trash (and extortive) by comparison.
> There was actually a project at an innovation center at a well-known medical center which leveraged ML to maximize the amount of codes they could bill for without being rejected. T
I think this perspective makes sense from someone who works on the insurance side of things.
On the other side, there is no way for the insurance company to acknowledge the clinical severity of a patient except via abstruse ICD code choices that only billing clerks know. So this is a perfect case for an LLM - map normal human words onto ICD claim codes to accurately convey patient severity.
Good thing the moral hazard of getting unnecessary healthcare that your doctor ordered for you is controlled for.
Perhaps someone should also control the moral hazard of the people owning and running this racket getting unnecessary amounts of money, or an unnecessary seat at the table.
The moral hazard is making a product with nearly totally inelastic demand a multi layered adversarial free market with structural price opacity. Thanks Reagan!
Reagan hasn't been president for close to 40 years and died more than 20 years ago. At what point do we accept responsibility for this instead of blaming dead presidents?
You might be surprised just how durable the effects of 40-year-old decisions are. You can actually see changes to the very degree completion-rates, when partitioned by field of study. Particularly, education and physics fields (as classified by NCES), have absolutely cratered from the mid 70s to the mid 80s, while business fields became dominant. And if you need data, I actually published an entire (and entirely too long) essay, analyzing the NCES data from 1970 to 2011 (a sequel post for 2011 to present is planned), yesterday[0][1]. Healthcare tends to boom and bust[2] in cycles, and those cycles are _inversely_ correlated with engineering, informatics (the most elegant term for what we call "computer and information sciences"), and business.
[0]: https://galacticbeyond.com/two-percent-programmer/
[1]: https://web.archive.org/web/20260620162923/https://galacticb...
[2]: In both the economic sense, and in the completion-rate sense, because those two things are correlated. And they have been correlated since the 1980s, because a lot of the healthcare industry became de-regulated and more profitable as a result, since at least 1978 (when hospitals were de-forbidden from making profits).
Had me in the first half there
Everyone is in on the grift in the industry. Obama wanted to go single payer but realized 10% of america would be out of a job if we streamlined the bureaucracy
Obama proposed and pushed for single payer and it was voted down in the senate. Specifically, if you want to blame someone, it was Joe Lieberman who would have been the deciding vote, and he killed it.
Joe Lieberman realized that he was from a state with massive moneymaking insurance operations. Had nothing to do with Obama streamlining bureaucracy.
> Specifically, if you want to blame someone, it was Joe Lieberman who would have been the deciding vote, and he killed it.
I too believed that Joe Lieberman sucked, and sure, he did. However: there's a pattern of parties creating convenient designated villains within the party (usually someone not up for re-election) who can take the blame for doing the thing the party insiders planned to do all along. It's been especially noticeable in the current Congress.
When the designated villain sticks it to us next time, notice how there are zero consequences for them.
Maybe it’s a massive insider conspiracy to have the party ruin its own landmark legislation of the era and all of the coconspirators have kept their mouth shut on a major scandal for more than a decade.
Maybe it was the 1.1 million dollars in donations from the healthcare industry to Joe Lieberman.
We may never know.
> Maybe it was the 1.1 million dollars in donations from the healthcare industry to Joe Lieberman.
Frankly Joe should've been furious about how little he received, then:
> Campaign finance: The key players in the crafting of Obamacare were largely dependent upon health industry corporations for election and re-election. Barack Obama received $22.4 million in 2008, and the health sector was his third-most-important source of corporate donors (health industry donations alone were thirty-two times greater than all labor union contributions to Obama). The twenty-three members of the Senate Finance Committee (SFC) received nearly $16 million in 2008 and $20 million in 2010. Since 2003, the Committee’s Chair, Max Baucus, had received $3.4 million, or 23 percent of his total campaign donations; the minority leader, Republican Charles Grassley, had received $2 million. Committee members’ opposition to a “public option” that would compete with private insurers tended to correlate with donations from the health industry over the previous two decades.27 The structure of the electoral process thus guaranteed the presence of health industry loyalists in key Congressional offices.
Source: https://newlaborforum.cuny.edu/2014/10/01/healthy-wealthy-an...
Nah, the problem was that the blue dog democrat congresscritters (holding usually red districts) would have been out of a job.
So instead of single payer, everyone got the ACA, and then the blue dog dems lost their jobs anyways.
What we have today isn't insurance in any meaningful sense. Traditional insurance is about pricing risk: healthier people pay less, higher-risk people pay more, and the pool works because premiums reflect actuarial reality.
The Affordable Care Act largely banned that. Insurers can no longer use health status or pre-existing conditions to set rates (via "community rating" and guaranteed issue rules). The result is that everyone effectively pays into a giant, heavily regulated pool. There's a finite amount of money in that pool, so someone has to ration care. That job now falls to the insurance companies, who deny or delay procedures, medications, and treatments.
Health insurers aren't saints — but the core problem is structural. When you remove risk pricing while mandating coverage, adverse selection and cost shifting are inevitable. The ACA patched one serious issue (pre-existing conditions) by breaking the fundamental mechanism that makes insurance sustainable.
We need to be honest about the tradeoffs instead of pretending this is still "insurance."
Basically you have a tax by another name.
That's not necessarily a problem in and of itself, there's plenty of areas in life where we have essentially a tax by another name or system. The problem I see, looking from the outside from a country with a "universal" health system, is that the American way of doing it is extremely complex, which pushes up the price of everything. It's not that there are profits involved, it's that there are so many incentives, and then patches to prevent them, generating more in other places.
It makes sense. People don't want insurance, they want health care.