The Case of the Broken Wrist

By Kevin Quinn, vice president, payment method development, Government Healthcare Solutions, Xerox

Ready for a pop quiz?

On what medical condition does the U.S. spend $361 billion, twice as much as it does on heart disease and three times as much as it does on cancer?

The answer is Administritis. According to the Institute of Medicine, excess administrative cost is a big reason why our healthcare system is the world’s most expensive. Since my wife, Candida, suffered a tennis injury and broke her wrist last summer, she and I have been up close and personal with Administritis – facing complicated policies, procedures and charges that the shift to value-based healthcare and the emphasis on patient experience seek to reduce.

When Candida fell while back-pedaling for an overhead shot on a tennis court, she extended her left arm, splintering her radius and breaking her ulna. As far as broken wrists go, this was fairly severe. In fact, her surgeon would later describe it as a “top 10” fracture in his experience.

In the four months following the accident, Candida had two emergency room visits, six surgeon office visits, one surgery, one CT scan, six x-rays, 17 physical therapy sessions and nine prescriptions. Total charges were over $34,000, of which the insurer paid 60 percent, she paid 16 percent and providers wrote off 24 percent (providers who participate in an insurer’s network negotiate payment rates and then write off the difference between charges and payment). During this time, she received about 40 mailings from providers and her insurer.

A year later, she has about 90 percent of her hand function back with some intermittent pain. Her surgeon says this is as good of an outcome as we could expect, and arthritis is highly likely.

Candida’s case was straightforward – it would have been much more complicated if she was uninsured, if she had a chronic condition, if a third party were liable or if she received care from outside the insurer’s network. And even these simple cases are handled more efficiently now than would have been the case a mere five or 10 years ago. Today, we have the benefit of a nationwide HIPAA codeset and transaction standards. In addition, eligibility verification is routinely completed in real time, and pharmacy transactions involving eligibility, authorization, billing and pricing are almost always performed within a few seconds.

But there are still major challenges remaining:

• Providers and insurers are almost always unable or unwilling to tell patients in advance what the cost will be for a given procedure.
• Disaggregated fee schedules lead to disputes and delays between providers and insurers.
• Transparency remains elusive.
• Nothing about billing or payment occurs in real time, even though medical claims are usually submitted electronically.

Kevin Quinn will discuss healthcare administrative costs and payment system reform at the Medicaid Enterprise Systems Conference in Des Moines, Iowa on August 18.

The case of this broken wrist highlights some of the many inefficiencies and obstacles that patients, providers and payers, alike, are attempting to navigate in today’s ever-changing and complex healthcare system. From the remarkable amount of paperwork and separate charges and payments for closely related services to questionable billing for certain items and high levels of charges for some services – the healthcare payment maze is seemingly endless.

These are all reasons many experts are calling for the industry to rethink its payment models in order to reduce costs and improve the patient experience. For example, episode-based payments would require patients to make only a single payment for a given procedure. Then, it would be the responsibility of the provider to keep the cost of the procedure in check.

I will discuss “The Case of the Broken Wrist” and some potential options for unraveling the payment model conundrum at the Medicaid Enterprise Systems Conference in Des Moines, Iowa on August 18. Learn more about MESC here!

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