Controlling health care costs depends on eliminating unnecessary, low-value care. But insurers have an inherent conflict of interest and shouldn't be running prior authorization.
The contingency fee structure for WISeR is the tell — paying vendors a percentage of what they deny isn't utilization management, it's incentivized denial with extra steps. The conflict of interest isn't incidental to the design, it is the design.
The provider budget argument is compelling precisely because it eliminates the middleman who profits from saying no. But it raises a question the piece doesn't quite answer: who sets the budget, and on what basis? Because the same insurers currently running prior authorization would likely be involved in setting those budgets, and the conflict of interest follows the money wherever it goes.
The deeper problem is that prior authorization exists because we built a system where the entity paying for care has a financial interest in minimizing it. That conflict can't be engineered away with better reimbursement models — it has to be removed structurally. A universal funding floor where the payer is not a profit-seeking entity eliminates the incentive to deny entirely. Medicare already does this for 69 million people without the prior authorization apparatus that MA plans have built.
I've been working on a framework that extends that principle — universal coverage with private delivery, funded through a mechanism that takes the profit motive out of the coverage decision. burnedatbothends.org if you want to see the architecture. The prior authorization problem largely disappears when the funding structure changes.
I’ve been touting the idea of putting provider organizations on budgets whose increases from year to year are regulated, which gives the flexibility to design care to maximize health. See my previous post. I will check out your site.
There is a natural, important question: "Why does the rest of the developed world spend 9%-14.5% of GDP on healthcare, and the U.S. 18%, when they have higher life expectancies?".
There undoubtedly are multiple causes. It would seem that with enough smart-enough people given sufficient resources, they could research by really diving into the details of the healthcare system in the other developed countries and figure out the causes with reasonable certainty. With rough dollar values for each cause.
However, I suspect such a sufficient research project have never been done. I wonder, does anyone in the world actually know?
Eliminating for profit health insurance, especially Medicare Advantage, would be a better start. It was supposed to save Medicare money. Instead it costs Medicare more money for equivalent patients, with no value added for the patients. The basis of profit in any insurance is collecting premiums--revenues--and limiting claims, which are pure cost. Health insurers can either avoid risky patients (who of course need the insurance the most) or refuse to pay claims for services that are "low value".
Re: value. Medicine is statistics--limiting mammograms to women over 65, for example, is higher value (will pick up more cancers) than mammograms for women over 50, but some women with breast cancer will be missed. And breast cancers in younger women can be more aggressive. Sometimes important findings of disease that is usually asymptomatic until too late (pancreatic cancer, for example) is picked up by accident. Judgment is essential to medicine. Every patient is different. I prefer a doctor who knows me and has enough time for me, that I trust, more than an algorithm designed to save the insurer money. (Continuity of care, which is critical to good medicine, is disappearing in the U.S.)
We need to pay physicians who do not do procedures, more. (If we pay less for procedures, based on cost, eventually there will be fewer procedures!) We need pay doctors more to see sicker patients (use HCC codes), because they will need to see fewer. Or pay physicians salary, as the Mayo Clinic does, to provide whatever care the patient needs.
Also, we need to decentralize medicine, eliminate rents: there is no reason to have enormous hospital or nursing home "chains", there are limited if any economies of huge scale, limited benefits from standardization. Medicine is not business, not manufacturing.
Eliminating Medicare Advantage, requiring employers and employees to pay for health care the way they pay for Social Security, will generate enough money to pay enough to have enough primary care physicians and non-procedural specialists. Medicare already sets fees based on cost, they can be easily adjusted.
There are a set of procedures and tests that should not be covered by Medicare. If you want them then pay out of pocket. Arthroscopy for knee pain. Steroid injections for back pain. Angioplasty for stable CAD.
That solves part of the PA dilemma. Just say no.
Public insurance should be reserved for high value services.
The contingency fee structure for WISeR is the tell — paying vendors a percentage of what they deny isn't utilization management, it's incentivized denial with extra steps. The conflict of interest isn't incidental to the design, it is the design.
The provider budget argument is compelling precisely because it eliminates the middleman who profits from saying no. But it raises a question the piece doesn't quite answer: who sets the budget, and on what basis? Because the same insurers currently running prior authorization would likely be involved in setting those budgets, and the conflict of interest follows the money wherever it goes.
The deeper problem is that prior authorization exists because we built a system where the entity paying for care has a financial interest in minimizing it. That conflict can't be engineered away with better reimbursement models — it has to be removed structurally. A universal funding floor where the payer is not a profit-seeking entity eliminates the incentive to deny entirely. Medicare already does this for 69 million people without the prior authorization apparatus that MA plans have built.
I've been working on a framework that extends that principle — universal coverage with private delivery, funded through a mechanism that takes the profit motive out of the coverage decision. burnedatbothends.org if you want to see the architecture. The prior authorization problem largely disappears when the funding structure changes.
Exactly
Very well said, my friend. I’m a retired surgeon, and now Medicare patient, and I always appreciate your informed commentary.
I’ve been touting the idea of putting provider organizations on budgets whose increases from year to year are regulated, which gives the flexibility to design care to maximize health. See my previous post. I will check out your site.
Thanks for the informative Health Affairs link on studies of clinical waste.
( https://www.healthaffairs.org/content/briefs/role-clinical-waste-excess-us-health-spending )
There is a natural, important question: "Why does the rest of the developed world spend 9%-14.5% of GDP on healthcare, and the U.S. 18%, when they have higher life expectancies?".
There undoubtedly are multiple causes. It would seem that with enough smart-enough people given sufficient resources, they could research by really diving into the details of the healthcare system in the other developed countries and figure out the causes with reasonable certainty. With rough dollar values for each cause.
However, I suspect such a sufficient research project have never been done. I wonder, does anyone in the world actually know?
Eliminating for profit health insurance, especially Medicare Advantage, would be a better start. It was supposed to save Medicare money. Instead it costs Medicare more money for equivalent patients, with no value added for the patients. The basis of profit in any insurance is collecting premiums--revenues--and limiting claims, which are pure cost. Health insurers can either avoid risky patients (who of course need the insurance the most) or refuse to pay claims for services that are "low value".
Re: value. Medicine is statistics--limiting mammograms to women over 65, for example, is higher value (will pick up more cancers) than mammograms for women over 50, but some women with breast cancer will be missed. And breast cancers in younger women can be more aggressive. Sometimes important findings of disease that is usually asymptomatic until too late (pancreatic cancer, for example) is picked up by accident. Judgment is essential to medicine. Every patient is different. I prefer a doctor who knows me and has enough time for me, that I trust, more than an algorithm designed to save the insurer money. (Continuity of care, which is critical to good medicine, is disappearing in the U.S.)
We need to pay physicians who do not do procedures, more. (If we pay less for procedures, based on cost, eventually there will be fewer procedures!) We need pay doctors more to see sicker patients (use HCC codes), because they will need to see fewer. Or pay physicians salary, as the Mayo Clinic does, to provide whatever care the patient needs.
Also, we need to decentralize medicine, eliminate rents: there is no reason to have enormous hospital or nursing home "chains", there are limited if any economies of huge scale, limited benefits from standardization. Medicine is not business, not manufacturing.
Eliminating Medicare Advantage, requiring employers and employees to pay for health care the way they pay for Social Security, will generate enough money to pay enough to have enough primary care physicians and non-procedural specialists. Medicare already sets fees based on cost, they can be easily adjusted.
C. Poplin MD FACP JD
There are a set of procedures and tests that should not be covered by Medicare. If you want them then pay out of pocket. Arthroscopy for knee pain. Steroid injections for back pain. Angioplasty for stable CAD.
That solves part of the PA dilemma. Just say no.
Public insurance should be reserved for high value services.