> Dana wrote: > companies spend up to 30% of premiums on administrative costs. > > Comment? >
I'll take a shot at it, but remember that this is a super dense subject. (1.) Did she also mention that the federal government contacts with private insurance to do its administration because private admin costs are lower? (2.) Admin costs are based on the plan. What people don't realize is that most companies are self-insured; i.e., the "insurance company" doesn't sell insurance! What they do sell is called ASO (administrative services only). Typically these break down into 2 types based on what the client wants: engineer-to-order & configure-to-order. Some companies are willing to use off-the-shelf plans and other companies want something custom or customized off the shelf. And the plans can be structured any old way to spread that cost in a zillion different ways. Think of that statistic this way: Software companies spend up to 30% of their revenue on software development. Some customers will buy the solutions you've already developed, some will want custom. Some will want to pay for the customization up front, some will want a SaaS license, some will want a monthly license, et al. (3.) Admin costs are determined by doctors!! Try this thought experiment: how many doctors, nurses, clinics, labs, hospitals, etc are in your county? Multiply that by the number of patients they see daily. That's how many claims per day - just your county - burdens the healthcare system with. Now think of the different type of practice management systems doctors have. And that some of them have none and will submit claims by paper. And that some of them will make mistakes and those mistake will need to be QA'd and corrected by the provider and resubmitted. Remember that part about the plan? If, say, Walmart decides to offer its employees 5 different plans, all custom engineer-to-order from an admin perspective, each provider will need to decide if they accept the plan (are "in network"). Claims will need to filter for all of these relationships and claim systems will need to engineered to do that. Wal-mart will decide how they will pay for it. SUMMARY ------------------- If there was: * only one plan and * all providers had similar technology to submit claims, and * there were common clearinghouses to QA claims and reconcile Processing would be easy! But there isn't and there isn't because that's how employers and providers want it. As a final note, real-time adjudication is the holy grail; a patient goes to the doctor and their visit is approved and paid on the spot. We'll need some serious digitization before THAT happens though. CASE STUDY --------------------- Take Medicare Advantage plans. They work via the "CMS-HCC" model which buckets ~3700 diagnosis codes into ~70 "HCCs" in order to establish a disease burden of the patient and then compare that against an average disease burden of, say, a county. The model pays MA orgs a base rate (capitated) plus more if their membership disease burden is higher and it works through a summation equation which is roughly: demographic factor + disease burden + interaction bonus. If you're still paying attention that means that MAOs are paid based on what doctors code for diseases. Every doctor. Including specialists, labs, etc. And every one of those charts needs to be accounted for to get the money. Mis diagnosis, errors? no money. IMO, this is a good public/private model in that, by design, it incents MAOs to keep their members healthy. These plans exist because Medicare has all kinds of gaps in coverage such as it doesn't provide for a periodic physical (preventative care) and doesn't cover catastrophic costs beyond roughly 3 months, amongst other gaps. But Medicare is also under-funded by ~$30 Billion. As is. Name me a private insurance company who's plans are in the hole by $30,000,000,000. Which is exactly why the "government plan to compete" language is hooey. And if that's such a great idea, how about a government software development company to compete? A government car company? A government salon company? A government shoe manufacturer? Couldn't all industries benefit from government competition? ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Want to reach the ColdFusion community with something they want? Let them know on the House of Fusion mailing lists Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:298539 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5
